Complaints about scams are increasing at a worrying rate, says the Banking Ombudsman.

The Banking Ombudsman Scheme’s annual report shows customer complaints about scams rose 43 per cent on the previous year, making up 625 of the 3,513 complaints received in 2022-23. Nearly a third of all complaints formally investigated were about scams, and the average loss was $57,000. Phishing and investment scams predominated.

Banking Ombudsman Nicola Sladden said the continual emergence of new and more sophisticated scams was a key factor in the rise, compounding a problem that was already costing New Zealanders more than $200 million a year.

"To slow this trend, the banking sector, along with other organisations, must take a more co-ordinated and unified approach to the problem.

"The Singaporeans have shown how beneficial such an approach can be. Their recently established anti-scam centre, made up of representatives from 80 stakeholders, has disrupted scams with great success through skilful intelligence-gathering and the clever use of technology.

"Working together to educate consumers about scams and how to avoid them can also pay dividends - as we showed this year with the well-received documentary series You’ve been scammed by Nigel Latta.

"One immediate way to beat some scams would be to introduce confirmation of payee technology. Banks are investing in better systems and security all the time, but this would be a game-changer - as consumers in the United Kingdom know and as consumers in Australia are beginning to discover.

"Authorised push payment fraud - and also accidentally misdirected payments - could be reduced by this technology, which allows a customer to check whether the name of the recipient's account matches the name and account details provided by the customer."

There is currently no contractual or legislative requirement for a bank to check whether the name of the recipient’s account matches the name and account details provided by the customer. Banks have committed to work with PaymentsNZ to help make a confirmation of payee service a reality. We support the urgent implementation of this fraud detection system.

Ms Sladden said there had been an increase in sophisticated unauthorised payment scam cases in which customers were duped into entering their banking credentials into fake websites.

"Banks must reimburse unauthorised online transactions unless customers have been dishonest or negligent, breached the terms and conditions of their accounts or cards, or failed to take reasonable steps to protect their banking.

"In one of the cases highlighted in our annual report, the customer genuinely believed she was giving payment authorisation codes to the bank, and there was nothing suspicious about the website that would have alerted a reasonable customer to the fact it was a fake.

"We did not consider she had acted negligently or breached the terms and conditions of her account by entering her details and the codes from her bank into the fake website.

"We also pointed out in this case that the bank’s text and email warnings about the codes were not sufficiently explicit. The bank reimbursed the customer for the full amount lost, nearly $30,000."

More than 5,500 bank customers contacted the scheme during the year, an increase of almost 20 per cent on 2021-22. The overwhelming majority of complaints - 95 per cent - were responded to within one working day.

A scheme-run dashboard that compiles data about complaints to banks showed more than 102,000 customers made complaints to their bank during the year, a rise of 10 per cent.

See the annual report here.

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