Stephanie Tonkin (left), Paul Haskell-Dowland and Catriona Lowe

Australians lost a combined $1.5 billion to investment scams last year, marking the highest financial losses of any other type of scam reported to authorities. So far this year, Australians have unwittingly handed over a whopping $115 million to an investment scam.

But as the losses continue to balloon, questions are being asked about what banks and financial institutions are doing to protect their customers from financial losses. While pressure is being applied to banks at the moment, other financial institutions such as super funds need to be on the alert.

A surge in imposter bond scams last year prompted authorities to issue a public warning. These usually impersonate real financial companies or banks and claim to offer government bonds or fixed term deposits. Text messages are an increasingly common contact method for scammers, Scamwatch data shows.

Promising big payouts and guaranteed returns, scammers utilise technology to ensure that investment scams appear to be a legitimate opportunity.

Cyber experts like Professor of Cyber Security Practice at Edith Cowan University, Paul Haskell-Dowland, is urging banks to step up and acknowledge their obligation to protect their customers with some basic checks and balances.

Victims often hastily make bank transfers to scammers in a bid to jump on board an opportunity too good to be true, he explains.

“Investment scam victims are often individuals who can’t afford to suffer a loss,” Haskell-Dowland says.

“Many of the reports I see is where people are losing all of their superannuation or all of their rainy day money. So convincing are these scams, that people invest everything they have into the scam, and continue to invest on the promise of greater returns or early returns.”

The fact that these scams are often linked to criminal activity and monies scammed from Australian victims is often moved overseas should prompt the banks realise they have a part to play in stamping out criminal activity, he says.

Lost to scams

Meanwhile, a damning report from the industry watchdog reveals that of more than $500 million lost to scams through the big four banks, only $21 million was reimbursed in compensation, the ACCC report found.

ACCC deputy chair Catriona Lowe is urging for a coordinated response across government, law enforcement and the private sector to combat scams more effectively.

The establishment of the Federal Government’s National Anti-Scam Centre forms part of that response. Meanwhile, the Australian Banking Association is working on an industry-wide standard to implement consistency and improve scam victims’ experiences with their banks.

“Australians lose more money to scams than ever before in 2022, but the true cost of scams is much more than a dollar figure as they also cause emotional distress to victims, their families and businesses,” Lowe says.