Hon Scott Simpson
Minister of Commerce and Consumer Affairs

The Government is introducing new legal protections so banks, telecommunications providers and digital platforms can act faster to block suspected online scams, Commerce and Consumer Affairs Minister Scott Simpson says.

“Too many Kiwis are being ripped off by scams that spread through fake websites, texts and social media,” Mr Simpson says.

This new legal protection, known as a safe harbour, is for online service providers that take reasonable, good faith steps to disrupt suspected scams.

“Entities tell us they want to pull these scams down earlier, but they worry about being prosecuted if they accidentally take down a legitimate customer or website. These changes give them more confidence to act when something looks wrong.”

“This is about fast, decisive action to combat scammers. If a bank wants to pause a suspicious payment, or a telco wants to block a fake website link in a text campaign, we want them to be able to do that promptly without looking over their shoulder.”

The safe harbour will include conditions to protect legitimate customers and businesses. It will only apply where:

• The provider has reasonable grounds to think the activity or website is a scam.
• The action taken is reasonable and proportionate to the risk.
• Any disruption to legitimate customers or businesses is corrected as soon as it is discovered.

The work supports the New Zealand Anti Scam Alliance, a cross-sector group bringing together government agencies, banks, telecommunications providers, digital platforms and consumer representatives to prevent, detect and disrupt scams.

To complement the safe harbour, the Alliance is also exploring a “trusted flagger” system. Under this model, regulators and law enforcement could provide reliable information about suspected scams to online providers, helping them distinguish scams from legitimate activity and act with greater confidence.

In the last year alone, Payments NZ has reported gross scam losses of around 265 million dollars through New Zealand bank accounts.

“Those numbers are too high,” Mr Simpson says. “We need a prevention first approach, where scams are blocked as early as possible.”

Today the New Zealand Banking Association has also announced a new fraud intelligence tool that will help stop scammers using “mule” accounts to move stolen money through the banking system.

The system will help banks:

• Identify and share information about suspected mule accounts more quickly.
• Freeze funds before they are moved on.
• From 30 November, meet their commitment to warn customers if they are about to send money to a high risk account.

“This technology will help banks move faster when money is at risk, and it fits well with the Government’s push to give providers more confidence to intervene early,” Mr Simpson says.

“Scams are constantly evolving, and no single organisation can tackle them on their own,” Mr Simpson says. “These changes are about backing the providers who see scams first, and giving them the tools and confidence to shut them down faster.”

Further information on the work done by the Anti Scam Alliance will be shared in the coming months.

Notes:

These changes will be introduced through the Fair-Trading Amendment Act. The first half of changes relating to penalties were announced on Sunday 16 November.

The Payments NZ figures reflect the total amount defrauded through New Zealand bank accounts that have been investigated by banks, and previous to any recovery of funds or compensation from banks.

Examples of entities, their role, and what actions they can take under this new framework is below:

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