Australian Banks Crack Down on Fraudulent Activities with New Technology

In a major victory for consumer advocates, Australian banks have announced plans to introduce technology that will block customers from transferring money to fraudulent accounts. This move is expected to significantly reduce the number of scams in the country.

Background

Australian banks had initially resisted calls to implement this measure, but have finally buckled under pressure from the Australian Competition and Consumer Commission (ACCC) and the Consumer Action Law Centre (Calc).

New Technology: Confirmation of Payee

The new technology will ensure that customers can confirm they are transferring money to the correct person before making a payment. This is a major departure from the current system, which relies on consumers to check the payment details before sending the funds.

Key Features and Benefits

* Confirmation of payee technology will be rolled out across the sector over the next two years.

• A $100 million investment in the confirmation of payee system has been announced.
• The Australian Bankers Association (ABA) also plans to improve technology and controls to prevent identity fraud, and introduce biometric checks when opening new accounts.

Expected Impact

The move is expected to make a significant dent in the estimated $400 million lost to scams in Australia this year. Consumer advocates are hailing the announcement as a “huge” step forward, but are also calling on the government to implement mandatory codes that would require banks to reimburse victims of scams.

Quotes from Industry Experts

• Stephanie Tonkin, CEO of Calc: “It’s a huge difference, but inevitably some scams will still fall through the gaps. So we’re calling for a high bar for mandatory reimbursement to be the final piece of the puzzle included in the regulation.”
• Anna Bligh, CEO of the ABA: “This new scam accord is a new offensive in the war on scams and reflects our commitment to safeguarding Australian consumers.”

International Comparison

In 2020, the UK introduced similar technology, which resulted in a 35% reduction in misdirected payments.

Future Plans

Work will commence immediately on implementing the confirmation of payee system, with a rollout expected over the next two years. The Australian government has yet to comment on whether it will implement mandatory codes for scam reimbursement, but consumer advocates are hoping that the new technology will be the catalyst for further action.

Conclusion

The introduction of this technology is a major undertaking that will require significant changes to current systems. However, with 15.4 billion transactions worth $2.5 trillion every year across the banking sector, it’s an important step in preventing fraudulent activities and protecting Australian consumers.