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Australian banks have launched a new digital platform that aims to significantly reduce the time it takes to report fraudulent transfers, in an effort to prevent scammers from cashing out.
According to the Australian Banking Association (ABA), the platform will allow banks to report scam payments in close to real time, increasing the likelihood that funds can be frozen and returned to customers.
Known as the Fraud Reporting Exchange (FRX), the platform will enable faster and more targeted communications between banks to fight fraud and scams.
“Given every minute can be crucial in disrupting scams, the launch of the FRX is a major development,” said Anna Bligh, CEO of the ABA.
“It means more and more scammers are going to hit a brick wall and it adds to the arsenal of anti-scam initiatives underway.”
Going live this week, the FRX already had 17 banks either on the platform or in the process of joining it, out of the ABA’s 20 members.
One of the key features of the FRX is that it will allow banks to freeze multiple transactions when they are believed to be taking place as part of the same scam.
As covered by VIXIO, the speed with which these transactions can be executed is one of the main difficulties financial institutions (FIs) face when fighting scammers and associated “money mule” accounts.
The ABA also noted that communications between member banks within the FRX will be tracked and secured, reducing the need for multiple phone calls and emails between banks.
The FRX is owned and operated by the Australian Financial Crimes Exchange (AFCX), an independent body built and funded by Australian banks.
In FRX trials prior to the launch, the platform was found to reduce the time it takes banks to resolve scam cases by more than half.
“Thanks to the banking sector, and particularly the four major banks, this new platform is set to make an impact on scammers and can also be used to help to bring together banks and any other organisations involved in payments,” said David Pegley, managing director of the AFCX.
National Anti-Scam Centre goes live
Also this week, the Australian Competition and Consumer Commission (ACCC) has welcomed a decision by the federal government to establish a new National Anti-Scam Centre (NASC).
In last week’s Budget, the government allocated A$58m in funding to the ACCC to complete the set-up of the NASC over the next two years.
In a statement, the ACCC said that A$44m will go towards building new “high-frequency data sharing” technology that will enable the NASC to receive scam reports from any institution (public or private) and centralise this intelligence.
The new technology will allow the ACCC to distribute actionable data to public and private actors in the fight against scams.
This could include banks so that they can freeze an account, telcos so that they can block certain numbers and digital platforms so that they can take down websites or users.
The NASC is set to launch in July 2023 and its data-sharing capabilities will be built out in phases over the next three years.
Stephanie Tonkin, CEO of the Consumer Action watchdog, welcomed the government’s commitment to funding the NASC, but it should be combined with new laws on mandatory reimbursements to scam victims.
“We support the National Anti-Scam Centre, but it will only deliver meaningful outcomes if it is backed up by new laws that mandate industry action on scam prevention and impose liability for losses when they fail,” she said.
“What we need now is for banks to reimburse scams victims - except in circumstances of gross negligence — and this needs to be made mandatory by the federal government.”
Scams v Australians
In 2022, as covered by VIXIO, Australia saw a record-breaking year in terms of total losses to scams.
According to the ACCC, Australians lost A$3.1bn to scams in 2022, an 80 percent increase over the previous year.
In its 2022 "Targeting scams" report, the ACCC once again endorsed the idea of a UK-style contingent reimbursement model (CRM).
Under the CRM, banks are obliged to uphold minimum standards to detect, prevent and respond to authorised push payment (APP) scams, and in cases where scams take place undetected, the bank is typically required to compensate the customer.
Daniel Holmes, fraud prevention SME at Feedzai, told VIXIO that regulators worldwide are moving towards CRM as a baseline protection against scam losses.
He added that certain jurisdictions, such as the US and the UK, are likely to expand CRM to include stronger provisions on beneficiary liability, which would add a further layer of protection.
“Typically, fraud liability has sat with the victim’s bank,” he said. “But in the case of scams, a fraudster has to control the destination account, otherwise they can’t cash out.
“Proposed liability changes would encourage banks to think about payments coming into their customer accounts, not just the ones leaving them.
“This would create a more holistic approach to fraud prevention and would lower the chances of success for fraudsters, as banks get multiple opportunities to stop the fraud.”
In Australia, another fraud-fighting measure endorsed by the ACCC and the federal government is an SMS Sender ID register, similar to that used in Singapore.
Catriona Lowe, deputy chair of the ACCC, said a register would help “assist in disrupting impersonation scams and help consumers determine whether a text message is from a trusted source”.
In 2022, as Lowe pointed out, text messages surpassed phone calls as the most common method used by scammers to contact victims.
The ACCC counted almost 80,000 reports of SMS scams in 2022, driven partly by the explosion in "Hi mum" scams in the first half of the year.
