The big banks are under growing pressure to do more to prevent scams and repay victims after a report by the corporate regulator found they only compensate a tiny number of customers.
Australians lost a record $3.1 billion to scams last year, with experts warning anyone could become a victim as the cons grow increasingly sophisticated.
The corporate regulator, ASIC, says banks "can and should do more" to protect customers after it did a deep dive into how they handle scams.
ASIC's report covers the big four banks — Westpac, NAB, Commonwealth and ANZ — and their scam procedures in the 2021-2022 financial year.
About 31,100 customers at the big four banks collectively lost more than $558 million to scams in that 12-month period.
The banks only paid about $21 million in compensation to the victims and the rate of reimbursement was very low, ranging between 2 and 5 per cent.
ASIC's report found policies for dealing with scam losses varied greatly across the big four banks, and said universal measures should be put in place.
"We are really calling for there to be a consistent approach across financial institutions as to how scam losses are dealt with," ASIC deputy chair Sarah Court said.
"We really need to make sure that scams are dealt with in a holistic and comprehensive way by all financial institutions."
The Australian Banking Association (ABA) said it was already working on an industry-wide standard to implement consistency and improve scam victims' experiences with their banks.
Consumer advocates think banks should also be forced to pay compensation to scam victims, except in cases where the victim was negligent.
Consumer Action Law Centre CEO Stephanie Tonkin said putting banks on the hook for compensation would encourage them to invest more in preventing scams happening in the first place.
"[Banks] have billions of dollars in windfall profits that they should be putting towards actually fighting this crisis," she said.
Convenience has a price
The move to instant digital payments, while being convenient for customers, had made it easier and faster for scammers to move funds, the report said.
It suggested making some transactions harder to carry out quickly — also known as adding "friction" — but noted that could be difficult in an era where customers expect speed.
Some of the big four banks have also started reintroducing "friction" to digital payments, but approaches varied wildly across institutions.
The report said only one bank had acted to introduce prompts to warn a customer before making a high-risk transaction, such as for first-time investments in cryptocurrency.
That's despite crypto being an increasingly common payment method used by scammers.
The report also said banks' resourcing had not kept pace with the increasing volume of scams, causing delays and distress when handling victims' cases.
Despite the tools available to banks to detect scams, only 13 per cent of scam payments were detected and stopped, the report said.
However the ABA said this figure "seriously under-represents" the success banks have had in preventing scams.
"The ASIC Report only considers the proportion of scams that get through the system that are detected and stopped," ABA chief executive Anna Bligh said.
"In fact, banks detect and stop millions of scams ever getting through the system – which means customers never even see them."
Scam response can be 'random'
The report also said resourcing issues had led to delays in chasing up funds that went to scams.
One customer who lost $70,000 to a scammer asked her bank to try and chase up the funds. The bank contacted the receiving institution, didn't receive a response, then only followed up again four months later.
Poor resourcing also meant some banks couldn't review all transactions that were red-flagged as possible scams, the report said.
Only one of the big four banks had an institution-wide scam policy, and only one bank had carried out a thorough review of its scam prevention policies in the past three years, the report said.
It also found that scam victims could get different responses from their bank depending on which department they spoke to.
"We need to be confident that [the major banks] have comprehensive scam strategies to explain to their customers if they do unfortunately become the victim of a scam," Ms Court said.
"What is the bank's approach going to be? What's the obligation on the bank? What can the bank tell their customer that they can expect in that situation?
"It can't be a random approach, depending on who you happen to speak to in the bank."
The ABA said banks had already identified the need for more consistency and had been developing an industry-wide standard over the past six months.
It said the planned industry guideline would aim to improve customers' experiences when they were scammed, and consider a suitable balance between friction and customer experiences.
It also pointed out that banks are only one part of the scams ecosystem and that everyone from government to law enforcement needed to work together.
"Most scams arrive through the telecommunications system via an SMS or email, through an online platform or via an online shopping site, none of which are controlled by banks," Ms Bligh said.
