New platform to share information and freeze scam payments
Australia’s banks have announced a new initiative to combat fraudulent transactions and protect their customers from losing money to sophisticated scams. The initiative, called the Fraud Reporting Exchange (FRX), is a digital platform that allows banks to share information about scam payments in near real time and freeze the funds before they are transferred to the scammers.
The FRX platform was launched by the Australian Banking Association (ABA) on Tuesday, following a 12-month pilot that involved 17 banks, including the big four. The ABA said the platform would streamline communication between the banks, improve their ability to identify and disrupt scams, and facilitate the return of funds to the victims where possible.
According to the ABA, bank transfers have been identified as the most common payment method for scams, but the FRX platform will help the banks block the movement of money to fraudsters. The platform will also enable the banks to halt multiple fraudulent transactions that are part of the same scam, and share intelligence to assist with loss-prevention efforts.
“Given every minute can be crucial in disrupting scams, the launch of the FRX is a major development,” ABA chief executive Anna Bligh said. “It means more and more scammers are going to hit a brick wall and adds to the arsenal of anti-scam initiatives under way.”
Bligh said it was imperative that consumers report a fraudulent or scam payment to their bank as soon as possible. “The sooner that banks know about a fraud, the sooner they can take swift action to try to halt the payment before it gets to the scammers,” she said.
Australians lost over $3 billion to scams in 2022
The FRX platform comes as Australians are losing more and more money to scams, with over $3 billion reported lost in 2022 alone. The Australian Competition and Consumer Commission (ACCC) said that scams increased by 23% in 2022, with more than 500,000 reports received by Scamwatch and other government agencies.
The ACCC said that the most common types of scams were phishing, online shopping, investment, romance, and threat-based scams. The ACCC also said that scammers were using new techniques and technologies to target their victims, such as voice cloning, deepfake videos, and biometric spoofing.
Biometric spoofing is a method of tricking biometric systems, such as fingerprint scanners, facial recognition, or iris scanners, by using fake or stolen biometric data. Scammers can use biometric spoofing to access the victims’ bank accounts, online services, or devices, and siphon funds or personal information.
The ACCC warned that biometric spoofing was on the rise, and urged consumers to be careful about how they share their biometric data and who they trust with it. The ACCC also advised consumers to use strong passwords, multi-factor authentication, and encryption to protect their online accounts and devices.
Consumer groups call for mandatory compensation and better protections
While the FRX platform has been welcomed by consumer groups, they have also called for more action from the government and the banks to prevent scams and compensate the victims. Consumer Action Law Centre, Financial Counselling Australia, and Financial Rights Legal Centre said that the banks were moving too slowly to share information and stop scam payments, and that customers remained exposed to losses.
The consumer groups said that the FRX platform still put the onus on the customers to detect and report scams, and that the banks should be proactive in monitoring and blocking suspicious transactions. They also said that the banks should be subjected to mandatory compensation payments to the victims, as they are in the UK and other countries.
The consumer groups also urged the government to implement better protections for consumers, such as requiring the banks to check that the account details match the name of the payee before processing a payment, and creating a national anti-scam centre to coordinate the response and recovery efforts.
The government announced on Monday that it would provide $58 million to fund a national anti-scam centre, which will report scams and distribute information to banks, law enforcement, and vulnerable communities. The government also said that it would work with the banks and other stakeholders to develop a code of practice for scam prevention and victim support.
