Scammers, armed with increasingly sophisticated techniques, pose a significant threat to our financial security. Photo / 123RF
Scammers, armed with increasingly sophisticated techniques, pose a significant threat to our financial security. Photo / 123RF
Opinion by Brent Carey
OPINION:
In an era where the ease of online transactions mirrors the ease scammers exploit our trust, New Zealand faces a pivotal moment.
The Government’s recent engagement with the Finance and Expenditure Select Committee over what can be done about scams presents a golden opportunity — not just forincremental adjustments to keep one step ahead of the scammers, but for a foundational overhaul of how we ensure financial safety in the digital age.
Our reliance on digital financial services has exploded, allowing for the seamless transfer of money across the globe with just a few taps on our devices. This convenience, however, is a double-edged sword.
As our financial systems have evolved, so too have the methods of those looking to exploit them.
Scammers, armed with increasingly sophisticated techniques, pose a significant threat to our financial security. According to Netsafe’s state of scams country report, New Zealanders who reported being scammed faced a cumulative total economic loss of nearly $2 billion in 2023 alone.
These figures only scratch the surface, given that fraud is notoriously under-reported. Victims often find themselves navigating a complex and sometimes indifferent bureaucratic landscape when seeking help, alongside the shame or embarrassment often experienced.
This is underscored by the Independent Police Conduct Authority and Judge Colin Doherty’s critique of the police response to fraud in 2022, highlighting a system that too often dismisses such crimes as minor or civil disputes, leaving fraud victims’ needs unmet.
The call for action is clear — New Zealanders’ trust in institutions’ ability to combat online scams is wavering. In various security and safety survey responses, a significant portion rate institutions’ efforts as unsatisfactory. This is also reflected in Netsafe’s own research. New Zealand media headlines like “Record Losses to Scams” or “274,000 Scammed in the Past Twelve Months” are indicative of a perceived “scam-demic”.
A “tough on crime” approach in the physical world must extend into the digital realm. This demands a shift in our fraud strategy beyond mere consumer education.
Education, while essential, falls short when faced with the cunning and sophistication of modern scammers. Scams such as romance and investment frauds exploit trust and manipulate emotions, rendering traditional education campaigns and advisories ineffective. Victims often find themselves ensnared before they realise the danger, challenging the notion that awareness alone can prevent scams. Families up and down the country are ill-equipped to know how to intervene with a family member to challenge them that their love may be real, but their lover may not be.
New Zealanders’ trust in institutions’ ability to combat online scams is wavering. Photo / 123RF
The responsibility, therefore, extends beyond the individual to the institutions facilitating our online interactions.
Government, banks, telecommunication companies and online platforms play crucial roles in the ecosystem that scammers exploit. By holding these entities accountable and incentivising them to safeguard their systems against fraud, we can shift the balance.
Banks currently bear the financial burden for unauthorised account access, prompting them to invest in robust fraud prevention measures. However, when it comes to scams where the victim authorises the payment, the banks’ incentive to intervene diminishes.
Shouldering more responsibility for these losses could spur financial institutions to develop more proactive and aggressive countermeasures.
Internationally, steps are being taken to protect consumers from such frauds. The UK’s Contingent Reimbursement Model Code mandates that victims of bank transfer scams, who are not at fault, be reimbursed. This approach has shown promise, significantly increasing the reimbursement rate for victims.
New Zealand must consider similar reforms. By integrating financial safety principles into our payment systems, including emerging services like open banking, we can create a more secure online environment.
This entails not only protecting users from scams but also ensures they have recourse when prevention measures fail.
As we navigate the complexities of the digital age, the need for a robust, multi-stakeholder and multifaceted response to online scams has never been more urgent. Siloed approaches, industries doing their own thing, or a lack of a joined-up approach will fail New Zealand.
At Netsafe more than 15,000 victims of scams share their heartbreaking stories with us every year. How many more victims do we need to hear from before we see some meaningful changes?
Worse still is the lousy prospect a scam victim faces of ever being able to recover their money once it is lost.
That prospect is what has prompted us to partner with Cybera to offer scam loss recovery services to New Zealanders who have lost money or cryptocurrency. This referral initiative acknowledges that victims of scams deserve support in recovering their losses. Actions not words.
New Zealand stands at a crossroads, with the opportunity to lead by example in protecting its citizens in the online world.
We must embrace systemic changes and prioritise the financial safety of individuals if we are to have any hope of a more secure and trusting digital environment for all.
