Tag: Fraud

Australians particularly at risk of financial deception

Amid the ongoing discussion around who should bear the responsibility for assisting vulnerable customers, recent data has revealed further need for targeted care and education, as Australians are falling prey to bank fraud and other financial scams at an alarming rate, via Australian Broker.

According to the KPMG Global Banking Fraud Survey, 61% of banks worldwide have reported an increase in fraud – both in value and volume – over the past three years, with Australia being among the countries hit the hardest.

“We are seeing a disproportionately high volume of scam attempts on Australians – there were 177,000 scam reports here last year, costing almost half a billion dollars. This compared to around 85,000 scam reports in the US and UK, with far bigger populations,” said Natalie Faulkner, KPMG global fraud lead.

KPMG’s survey found customer awareness is key for detecting fraud and reducing losses, and the firm called for more to be done to educate consumers. While branch staff in banks are a major point of contact, brokers – who now help six in 10 home owners to secure a mortgage – are naturally on the front line of this work.

“Education should be multifaceted to reach different audiences. For example, many scam victims tend to be the elderly or socially isolated, so education should not just be through digital channels but also through television, traditional media and even face-to-face sessions with vulnerable customer groups,” said Faulkner.

The data also revealed that cyber-related fraud is the most significant challenge faced worldwide, a reflection of the growth in digital banking.

“This is set in the context of a changing global banking landscape, where branch networks are shrinking, volumes of digital payments are increasing and there is less customer face time,” explained Faulkner.  

Open banking – which will be implemented next week – was mentioned as an emerging challenge in fraud risk, as it will see banks allowing third parties to access their customer data.

However, Faulkner noted, “On a positive note, having more transparency across accounts will enable the banks to know their customer more holistically and trace funds in fraud detection.”

Beware scammers wanting access to your computer and bank account

The ACCC says that scammers are increasingly catching out people by impersonating well-known businesses or the police so they can get access to computers and steal money or banking information.

The ACCC’s Scamwatch website has recorded a significant spike in these types of scams, known as remote access scams, with more than 8000 reports recorded in 2018 so far and losses totalling $4.4 million.

“The spike in remote access scams is very concerning; losses so far in 2018 have already surpassed those for the whole of 2017, and sadly it is older Australians that are losing the most money,” ACCC Deputy Chair Delia Rickard said.

Scammers will impersonate a well-known company, most commonly Telstra, NBN or Microsoft, or even the police, and spin you a very credible and believable story about why they need to access your computer using software such as TeamViewer.

“The scammers are becoming more sophisticated. The old trick scammers used to use was to call people and say there was a virus on their computer that needed fixing but, in a new twist, scammers are now telling people they need their help to catch hackers,” Ms Rickard said.

The scammers claim they are tracking the ‘scammers’ or ‘hackers’, and tell the consumer that their computer has been compromised and is being used to send scam messages. This is where they say with the victim’s help, they can use the victim’s computer and online banking to trap the (fake) ‘scammer’.

The scammer will then pretend to deposit money into their victim’s account. In reality the scammer just shuffles money between the victim’s accounts (for example, from a person’s credit card account to a savings account), which gives the illusion of money being deposited. The money is then sent out of the victim’s account as part of the con to ‘catch a scammer’, straight to the scammer’s own bank accounts.

“Unfortunately there are many stories from people who give a scammer access to their computer and are then conned into giving access to online banking. Some are also tricked into providing iTunes gift card numbers over the phone to these scammers,” Ms Rickard said.

Once the scammer has a victim on the hook, if they start to doubt the situation, the scammer will become threatening, stating that the victim would jeopardise the investigation if they refuse to help and may even face legal consequences.

These types of scam can be very scary, as scammers can become threatening and aggressive if they sense they are ‘losing’ the victim, or starting to cotton on. This is particularly frightening for older people who may not be as tech savvy.

“It’s vital that people remember they should never, ever, give an unsolicited caller access to your computer, and under no circumstances offer your personal, credit card or online account details over the phone,” Ms Rickard.

“If you receive a phone call out of the blue about your computer and remote access is requested, it’s a scam 100 per cent of the time. Just hang up.”

Australians Warned to Beware of Phone Scams

Australians are urged to be on guard against unscrupulous, unsolicited callers, claiming to represent the Australian Banking Association and asking for bank details to issue a ‘refund’, survey customer satisfaction or record banking history.

According to the ACCC every year 33,000 Australians are targeted by scammers in this particular way, with callers pretending to represent banks and other financial institutions, with recent estimates placing the cost to victims at over $4.7 million. This scam targeting the ABA is ongoing and was first reported in 2016. Banks often encounter this type of scam, with callers claiming to contact customers on their behalf.

Some of the techniques used by these scammers include:

  • Asking who you bank with, how long you have banked with them and your level of satisfaction
  • Asking for personal and banking details, including your name and driver’s licence number, bank account or credit card number, PINs or internet banking login
  • Telling people they are owed a ‘refund’ for overcharged bank fees but they have to pay a fee for it. They ask people to send money via post or Western Union.

Executive Director of Consumer Policy Christine Cupitt said that it was important customers remain vigilant against scammers even if they claim to be from reputable organisations such as banks or associations.

“We’ve seen a concerning rise in the number of people falsely claiming to be from the ABA, preying on unsuspecting victims and asking for them personal financial details,” Ms Cupitt said.

“The ABA, or any member bank, will never call members of the public seeking information about their personal bank accounts or security information.

“If you think you’ve given your personal information to a scammer we urge you to urgently contact your financial institution.

“It’s vitally important that Australians keep their financial identity safe by following important measures such as not giving out your PIN, deleting spam e-mails, keeping antivirus software up to date and not responding to requests from unknown phone numbers.

“This week is ‘National Scams Awareness Week’, a timely reminder that if you think you’ve been the target of scammers, or indeed the victim of one, you should report it immediately to ACCC’s www.scamwatch.gov.au,” she said.

Tips to protect your financial identity

  • Don’t provide your financial details, including PIN or internet banking login or password to anyone.
  • Guard the following identity information carefully and only provide to trusted people and entities: date of birth, current address, driver’s licence number and passport details.
  • Delete spam and scam e-mail – if the offer sounds too good to be true, it probably is.
  • Keep your anti-virus and firewall software up-to-date.
  • Do not respond to requests that ask you to call unknown or unverified phone numbers.

Be very careful about clicking on links in emails. Do not use links to access trusted websites. Enter the correct address for websites into the address bar of your browser.

Australians lost $340 million to scammers in 2017

The ACCC says that Australians lost more money to scammers in 2017 than in any other year since the ACCC began reporting on scam activity. According to the ACCC’s ninth annual Targeting scams report  more than 200,000 scam reports were submitted to the ACCC, Australian Cybercrime Online Reporting Network (ACORN) and other federal and state-based government agencies in 2017. Total losses reported were $340 million – a $40 million increase compared to 2016.

The top three most reported scam categories of 2017 were phishing, identity theft and false billing scams. Losses to investment scams reported to Scamwatch increased by 33 per cent which translates to an increase in losses of $7.6 million. Combined losses with ACORN reports brings investment scam losses to $64.6 million in 2017, an increase over the $59 million in combined losses reported in 2016. False billing scams reported to Scamwatch increased by 324 per cent, from $659 835 in 2016 to

$2.7 million in 2017.  Remote access scams reported to Scamwatch increased by 72 per cent representing an increase in losses of $1 million.

Targeting scams report 2017 infographic

This is the first time reported losses to scams have totalled more than $300 million and demonstrates the increasing impact of scams on Australians. Investment scams topped the losses at $64 million, an increase of more than 8 per cent. Dating and romance scams caused the second greatest losses at $42 million.

“It’s very worrying that Australians are losing such extraordinary amounts to scammers. Based on just the reports provided to the ACCC, victims are losing an average of $6500. In some cases people have lost more than $1 million,” ACCC Deputy Chair Delia Rickard said.

“Some scams are becoming very sophisticated and hard to spot. Scammers use modern technology like social media to contact and deceive their victims. In the past few years, reports indicate scammers are using aggressive techniques both over the phone and online.”

Today marks the beginning of Scams Awareness Week 2018 and this year Scamwatch is asking people to “Stop and check: is this for real?” when they’re contacted by scammers who are pretending to be from well-known government organisations or businesses.

Scamwatch received almost 33,000 reports of these threat-based impersonation scams in 2017. Over $4.7 million was reported lost and more than 2800 people gave their personal information to these scammers.

“These scams can be very frightening. For example, scammers will impersonate the Australian Taxation Office and threaten people with immediate arrest unless they pay an outstanding tax bill. They may pretend to be from Telstra to try to hack into your computer or from Centrelink promising extra payments in return for a ‘fee’,” Ms Rickard said.

“Scammers scare us or butter us up with promises of cash because they know it clouds our judgement. People get so worried about being arrested they don’t question if the person threatening them is genuine.”

“If you’re being threatened, take a deep breath, and ask yourself if the call makes sense. The ATO will never threaten you with immediate arrest; Telstra will never need to access your computer to ‘fix’ a problem; and Centrelink will never require a fee to pay money it owes you. Finally, none of these organisations will ask you to pay using iTunes gift cards,” Ms Rickard said.

“If something doesn’t feel right, hang up the phone or hit delete. If the person said they were, for example, from Telstra or the ATO, find the phone number for that organisation online or in the phone book, call them and let them know about the call you received. They’ll let you know if it’s genuine or a scam.”

The ACCC encourages people to visit www.scamwatch.gov.au (link is external) to report scams so we can warn others about them and learn more about what to do if they’re targeted by scams.

Aussie Home Loans Relied On The Banks To Trap Mortgage Fraud

From Business Insider.

CBA owned mortgage broker Aussie Home Loans does not have the capability to detect fraud committed by its brokers and instead waits until the banks detect scams and alert them as it does not have the resources.

The admissions were made by Aussie Home Loans general manager of people and culture Lynda Harris in a second day of questioning at the banking royal commission from counsel assisting Rowena Orr, QC.

It was revealed the company had recently bolstered the risk and compliance function at the broker to a total of nine employees.

Ms Harris was being questioned about the process behind the termination of an Aussie Home Loans broker Emma Khalil. Ms Khalil submitted multiple loan applications that were based on fake supporting documents including many from the same employer and with the same details.

“We don’t have that, we are reliant on the lenders to provide that expertise because ultimately they are the organisation that is approving the loans,” Lynda Harris said.

The fraud was not picked up until the client applied for a credit card with Westpac using different income details.

After the extent of the fraud committed by Ms Khalil was revealed, multiple internal emails between Aussie management revealed the broker was waiting for confirmation from Westpac before acting.

“If Westpac find that there was fraudulent activity on her part and revoke her accreditation, then that will be in breach of her contract and ultimately result in her termination from Aussie,” one such email read.

Ms Orr asked why Aussie was waiting to hear back from Westpac before terminating the employment of Ms Khalil despite identifying a number of suspect loans supported by similar or identical fake letters of employment.

“So Westpac – and in fact all large banks, have credit specialists and fraud teams that have the expertise to be able to determine fraud. We don’t have that, we are reliant on the lenders to provide that expertise because ultimately they are the organisation that is approving the loans,” Ms Harris said.

“What I want to put to you, Ms Harris, is that it’s not good enough, it’s not good enough that Aussie Home Loans outsources to a third party investigations of a fraudulent conduct made against one of its own employees. What do you say to that?” Ms Orr asked.

Ms Harris replied by saying that Ms Harris was not an employee of Aussie Home Loans and was in fact an independent contractor. She also said that company was not able to justify the expense.

Following an incredulous look from Ms Orr, Commissioner Ken Hayne sought clarification of the point

“It is open to me to conclude from your evidence from the time of the Khalil events and earlier, Aussie was of the view it was the role of the lender to investigate and determine whether there was fraud associated with one or more transactions?”

“Is it open to conclude from what you have told me that it remains Aussie’s view that it is for the lender and not Aussie to investigate and determine whether there was fraud associated with one or more transactions?”

Ms Harris explained the mortgage broker continued to invest in its systems and processes and hoped to develop a fulsome and rigorous process for the detection of anomalies in the loans submitted by its brokers.

She said the mortgage broker was developing a dashboard that would give it better visibility over its network however it was still in pilot phase.

ASIC Winds Up Payday Lending Companies for Unpaid Fines

ASIC says it has obtained orders winding up Fast Access Finance Pty Ltd, Fast Access Finance (Beenleigh) Pty Ltd and Fast Access Finance (BurleighHeads) Pty Ltd (the FAF Companies) for their failure to pay fines for breaching consumer credit laws. Mr Anthony Castley of William Buck has been appointed as the liquidator.

In March 2017, the Federal Court fined the FAF Companies a total of $730,000 after finding, in proceedings brought by ASIC, that the FAF Companies breached consumer credit laws by engaging in credit activities without holding an Australian credit licence.

The FAF Companies operated under a business model where consumers seeking small value loans were required to sign documents which purported to be for the purchase and sale of diamonds in order to obtain a loan. The reality was that there were no diamonds and it was  a sham designed to avoid consumer credit laws.

Background

ASIC was successful in obtaining orders against the FAF Companies in September 2015 and fines were imposed in March 2017 (refer: 13-205MR and 17-060MR).

Warning over shadow shop scam impersonating ASIC

ASIC warns the public to be wary of a scam where cold callers are claiming to be undertaking a ‘shadow shop’ on behalf of ASIC. A shadow shop is where real consumers are recruited to purchase services such as financial advice to help assess the standards in the market.

These scammers claim to be looking for shadow shoppers as part of an ASIC compliance and monitoring campaign. The scam maintains that it will pay you for your time and may encourage you to meet in person or attend a presentation after which you will receive a questionnaire to complete.

The scammers promote their services at the following website, www.theshadowshopper.com that makes false representations that their work is associated with ASIC.

ASIC has no involvement with this website or its operators, and is undertaking inquiries into the activities of the operators.

ASIC urges anyone who receives contact in these circumstances or is referred to this website to not respond.

From time to time ASIC carries out genuine consumer research including shadow shops, however we only work with accredited market research companies. If you are contacted by a company representing that they are undertaking research for ASIC you can call ASIC’s Infoline on 1300 300 630 to check.

This scam is not connected or associated with legitimate market research firm Shadow Shopper at http://www.shadowshopper.com.au/ and ASIC thanks them for bringing this matter to its attention.

Australian Property A Target For Money Laundering

An OECD report “Implementing The OECD Anti-Bribery Convention” was released this week and focused on Australia. This is part of the OECD Working Group on Bribery. Real Estate is in the spotlight, because sources in the banking and accounting sectors are warning that Australian real estate is at “significant risk” of being used for money laundering.

Among a raft of recommendations, is one saying Australia should be:

Taking urgent steps to address the risk that the proceeds of foreign bribery could be laundered through the Australian real estate sector. These should include specific measures to ensure that, in line with the FATF standards, the Australian financial system is not the sole gatekeeper for such transaction.

Here is a summary from The Adviser:

“Australia has stepped up its enforcement of foreign bribery since 2012, when the OECD Working Group on Bribery last evaluated Australia’s implementation of the OECD Anti-Bribery Convention, with seven convictions in two cases and 19 ongoing investigations,” the OECD said.

“However, in view of the level of exports and outward investment by Australian companies in jurisdictions and sectors at high risk for corruption, Australia must continue to increase its level of enforcement.”

The OECD report highlighted that one possible means of improving detection is through an increased focus on the proceeds of crime in financial flows back into Australia, particularly those involving the residential real estate sector.

It noted that Aussie property is “very attractive to foreign investors and is at ‘significant risk’ for money laundering”, according to a number of sources, including the 2015 Financial Action Task Force (FATF) Mutual Evaluation Report of Australia.

“Several participants at the onsite from civil society and the private sector also highlighted the significant risk of laundering foreign corrupt proceeds in the Australian real estate sector, including representatives from civil society, the banking sector and an international accounting and auditing firm.”

The review team noted the views of J.C. Sharman, an Australian academic and international AML/CFT and anti-corruption expert, on the Australian AML/CFT system’s failure to counter the flow of corrupt proceeds from abroad into the Australian real estate sector.

According to the report, Professor Sharman attributes the gap to a “lack of willingness” to take action rather than a lack of capacity, stating that Australia has some of the most powerful AML/CFT laws in the world.

He provides several examples where banks or AML/CFT authorities have failed to act on suspicious payments, and information from interviews with Australian bankers that believed the Commonwealth Government did not take seriously enough the issue of inward flows of corrupt proceeds.

Under Australian law, real estate agents, accountants and auditors, members of the legal profession and other Designated Non-Financial Business Professionals (DNFBPs) are not subject to AML/CFT obligations.

However, the OECD noted that Australia is currently considering the expansion of AML/CFT reporting obligations to real estate agents, lawyers, conveyancers, accountants, high-value dealers and trust and company service providers.

“This follows a statutory review of the AML/CFT regime (completed in April 2016), which recommended a cost-benefit analysis be undertaken (completed in June 2017),” the report said.

“The government is currently considering the report, which will inform any decision about the regulation of these sectors for AML/CFT purposes.”

FIRB to play a bigger role

The OECD believes that Australia’s Foreign Investment Review Board (FIRB) could potentially play a greater role in detecting and reporting suspicious transactions in the real estate sector, and leverage available information from the ATO, AUSTRAC and AFP to act on suspicious transactions relating to foreign investments.

The report explained: “Pursuant to the applicable legislative framework, the Treasurer is empowered to prohibit a foreign purchase of Australian property if satisfied that it would be contrary to the national interest, which includes considerations such as national security, competition, impact on the economy and character of the investor.

“The FIRB routinely consults with government agencies, including ASIC, AFP and Immigration and Border Protection, about applications. The ATO also meets regularly with these agencies to ensure that a cohesive, whole of government approach, is maintained.”

Payment Fraud Is Moving On Line

Data released today from the Australia Payment Network,  shows that in the 12 months to 30 June 2017, fraudulent transactions on Australian cards totalled more than $730.1 billion over the 12-month period – up 3.8% and Card fraud increased by 3.1% to $538.2 million.

Within that:

  • counterfeit and skimming fraud dropped 34%
  • card-not-present fraud increased 10%, now accounting for 82% of all fraud on Australian cards

As chip technology continues to provide strong protection against counterfeit card, fraud is migrating to online channels.

With malware and phishing attacks becoming increasingly sophisticated, we also need to be extremely wary of unsolicited emails and text messages from people we don’t know. Don’t click on the link provided and don’t be tricked into divulging confidential data such as your password

The total fraud on the scheme cards was $516 million.

 

UK Banks Not Doing Enough To Combat Online Fraud

The UK House of Commons Committee of Public Accounts has published an important report on The growing threat of online fraud (Sixth Report of Session 2017–19).The key observation is that Banks  do not accept enough responsibility for preventing and reducing online fraud and there is no data available to assess how well individual banks are performing. Unless all banks start working together, including making better use of technology, there will be little progress on tackling card fraud and returning money to customers.

  • One key issue is that unlike credit cards, where transactions are automatically refunded in case of dispute, payments made by customers via online banking on their instruction (“authorised push payments”), to a fraudulent destination is not.  It has been estimated that between 40% and 70% of people who are victims of scams do not get any money back. Banks are reported to be holding at least £130 million of funds that cannot accurately be traced back and returned to fraud victims, an amount that UK Finance said was probably a conservative estimate.
  • As the proportion of payments made by digital means continues to rise, stronger safeguards, and clearer account abilities should be placed on the banks.  This is not a topic the banks want to discuss.  Indeed, in evidence, individual banks know how they compare with others, but told the committee that banks did not publish individual numbers because then the fraudsters would target the ‘weakest’ of the banks. Of course, it might be in the banks’ own interest not to be transparent and publish individual data, as it could deter customers.
  • They found card not present fraud was significant, and needed to be reduced.
  • Finally, there was a need for better consumer awareness.

We suspect the situation in Australia is somewhat similar.

In summary, Online fraud is now the most prevalent crime in England and Wales, impacting victims not only financially but also causing untold distress to those affected. The cost of the crime is estimated at £10 billion, with around 2 million cyber-related fraud incidents last year, however the true extent of the problem remains unknown. Only around 20% of fraud is actually reported to police, with the emotional impact of the crime leaving many victims reluctant to come forward. The crime is indiscriminate, is growing rapidly and shows no signs of slowing down. Urgent action from government is needed, yet the Home Office’s response has been too slow and the banks are unwilling to share information about the extent of fraud with customers. The balance needs to be tipped in favour of the customer.

Online fraud is now too vast a problem for the Home Office to solve on its own, and it must work with a long list of other organisations including banks and retailers, however it remains the only body that can provide strategic national leadership. Setting up the Joint Fraud Task in 2016 was a positive step, but there is much still to do. The Department and its partners on the Joint Fraud Taskforce need to set clear objectives for what they plan to do, and by when, and need to be more transparent about their activities including putting information on the Home Office’s website.

The response from local police to fraud is inconsistent across England and Wales. The police must prioritise online fraud alongside efforts to tackle other sorts of crime. But it is vital that local forces get all the support they need to do this, including on identifying, developing and sharing good practice.

Banks are not doing enough to tackle online fraud and their response has not been proportionate to the scale of the problem. Banks need to take more responsibility and work together to tackle this problem head on. Banks now need to work on information sharing so that customers are offered more protection from scams. Campaigns to educate people and keep them safe online have so far been ineffective, supported by insufficient funds and resources. The Department must also ensure that banks are committed to developing more effective ways of tackling card not present fraud and that they are held to account for this and for returning money to customers who have been the victims of scams.