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In a significant move, Australian banks have yielded to pressure from consumer groups and pledged to enhance efforts against scams by implementing technology to block transfers to suspicious accounts.

Initially resisting such measures, the banks, prompted by calls from the Australian Competition and Consumer Commission (ACCC) and the Consumer Action Law Centre (Calc), will now restrict transfers if the recipient’s name and bank details do not match. The decision follows a similar successful measure introduced in the UK in 2020, resulting in a 35% reduction in misdirected payments in the first year. Australian consumer advocates applaud this move, emphasizing its potential to prevent millions of scams annually. They now call on the Australian government to follow the UK’s lead and mandate banks to reimburse scam victims. In 2023, Australians have suffered over $400 million in losses due to scams, a figure believed to be much higher considering underreporting. The banks plan to launch a scam-safe accord, investing $100 million in a new “confirmation of payee” system, expected to reduce scams by allowing customers to confirm the intended recipient. This system, rolling out across the sector, will introduce more warnings and delays for new payments or increased limits. Currently, the onus is on consumers to check PayID transactions in Australia. To prevent identity fraud, banks will enhance technology, implement controls, and introduce biometric checks for new account openings. With 15.4 billion transactions worth $2.5 trillion annually, the implementation of an industry-wide payee confirmation system is a significant undertaking, set to commence immediately and roll out between 2024 and 2025. While hailed as a crucial reform, advocates call for mandatory codes and high liability standards for scam losses to be the final piece of the regulatory puzzle.

This segment was created for the It’s 5:05 podcast