The numbers are staggering.
Each year, Australians lose billions to scammers.
Equally staggering is that Australia is amongst the top scammed nations.
In 2024, a report by Social Catfish, an online investigation service, found that the US is the most scammed country in the world.
The UK, Canada, India and Australia follow as the respective second through fifth most-scammed countries across the globe.
Total scam losses incorporating reports from Scamwatch, ReportCyber, the Australian Financial Crimes Exchange, IDcare, and the Australian Securities and Investments Commission (ASIC) in 2023 were estimated at approximately $2.7 billion, highlighting that scams remain a significant threat for Australians.
Banks and regulators must do more to protect Australians
Tania Clarke, director of policy and campaigns for the Consumer Action Law Centre, said the sophistication of scams catches people off-guard.
“We’re seeing more people coming to us with stories about being robbed by scammers, almost always it's life changing amounts that have been stolen.
“Perhaps we all trust too much, but I really don’t think gullibility is behind why someone falls victim to a criminal scammer,” said Clarke.
She adds the sophistication level of the scammers is off the charts.
“Scammers do research, clearly study behavioural analytics, expertly groom and target people when they are most vulnerable.”
This is particularly true for romance scams.
“None of the people who call us after being robbed thought they were being scammed at the time and realise fairly quickly that something's not right after it happens, once they leave what is known as the ‘hot state’.”
Australia an easy target
The key reason and another ‘why’ Australians are targeted is because banks have been allowed to operate in a legal vacuum and have been writing the rules for far too long.
“Australians have been the target of these highly organised criminal scamming businesses.
“They focus on Australia because our banks have done very little in comparison to other countries to stop scams.”
Clarke adds, if confirmation of payee is implemented across the Australian banking network, this could stop scammers in their tracks tricking banking customers into transferring money to scam accounts.
“Also, if introduced earlier and across the system, money transferred to scammers accounts could be stopped, allowing for the funds to be recovered and returned to victims.
“The banks have the technology at their disposal – why aren't they rolling it out across all accounts to protect their customers?”
New rules just introduced will see United Kingdom banks refund fraud victims up to £85,000 ($165,000) within five days.
A world first, the Payment Systems Regulator (PSR) has announced these refunds will become mandatory from 7 October 2024.
The UK watchdog said the new cap of £85,000 would cover more than 99% of claims.
In Australia, Stephen Jones, Assistant Treasurer and Minister for Financial Services, said that such an approach does “not require proactive steps to prevent the scam from occurring in the first place” and it “detaches liability from fault”.
“I’m cautious when someone says that a ‘bank’ should just pay compensation,” he said.
“What that often translates to is the customers of the bank paying higher costs.”
Is Aussie culture to blame?
Dr Kam-Fung (Henry) Cheung, UNSW Business School lecturer in the school of Information Systems and Technology Management (ISTM), and Shesha J Maheshwari, a researcher at ISTM, have been working on research into the psychological factors that cause people to fall victim to scams.
The pair found that financial desperation, being too trusting, and a lack of awareness about evolving scam techniques contribute to why many individuals today are being taken in by scams.
According to the pair, there are six key reasons why people fall victim to scams.
Trust and authority: Masquerading as trusted individuals or authoritative figures is a common tactic employed by scammers. By posing as government officials, company representatives, or law enforcement officers, scammers exploit trust to convince victims to share personal information.
Financial desperation: This is a significant factor. When faced with financial difficulties or a desire for quick financial gains, people become more vulnerable to scams promising high investment returns. This desperation to improve one's financial situation can cloud judgment.
Social engineering: Scammers excel at this, exploiting personal relationships and connections to manipulate victims. By leveraging information gathered from social media and other sources, scammers personalise their scams, making them appear more legitimate and trustworthy.
Lack of awareness: Scammers employ sophisticated tactics to deceive their victims. Many people are simply unaware of the various scams, such as those involving cryptocurrencies and blockchain.
Lack of vigilance: Busy lifestyles and constant distractions contribute to a lack of vigilance, causing individuals to overlook warning signs or suspicious behaviours that can leave individuals vulnerable.
Emotional triggers: Scammers frequently exploit emotional triggers to manipulate their targets. By creating a sense of urgency, fear, or excitement, scammers impair rational thinking and compel individuals to make impulsive decisions.
FOMO and loneliness behind online dating
Maheshwari said romance scams rely heavily on emotional manipulation.
“Younger and middle-aged victims tend to fall for romance or dating scams for various reasons. Firstly, the mindset of 'this will not happen to me’ and also the fear of missing out,” she said.
Perth psychologist Kerstin Anderson-Ridge, who has 22 years of counselling experience says she has seen a rise in people falling for scams.
“Many of my clients experience great distress over ‘potential lovers’ when they’re ghosted! Why people fall for romance scams, in my opinion, is loneliness. With social media and our workplace hustle culture, people feel isolated and want connection.”
She adds that people are so driven by the fear of losing the connection with this person that they keep giving more money or keep trying to communicate with the scammer.
“When they feel they could be abandoned, they try harder as they are so scared of being alone again.”
Australian Government invests $86.5 million to fight scams.
In the 2023 Budget, the government invested $86.5 million as part of its anti-scam platform which included establishing the National Anti-Scam Centre within the Australian Competition and Consumer Commission (ACCC).
In next year’s budget, the government has allocated $37.3 million over four years for the ACCC, the Australian Securities and Investments Commission (ASIC) and the Australian Communications and Media Authority (ACMA) to administer and enforce mandatory industry codes for regulated businesses to address scams on their platforms and services.
Legislation underway
Everyone is vulnerable to scams at certain times in their life.
Scams are the work of organised crime groups who have many years of experiencing in perfecting scam scripts, knowing what works with certain people and using a mixture of reward, fear and loneliness to trick people.
In September, the Australian Government released legislation to establish a new Scams Prevention Framework for public consultation.
The framework establishes scam prevention principles in legislation that will guide industry-specific, mandatory obligations on designated sectors.
The principles create obligations to prevent; detect; report; disrupt; and respond to scams, and to establish governance systems accordingly.
The framework will first apply to banks, telecommunications, digital platform service providers and social media.
To report a scam or seek assistance, visit the National Scam Centre website https://www.nasc.gov.au/
Report scams to ReportCyber and ScamWatch.
