More money is being lost to digital scams, and more Kiwis are being hit, according to a new report.
It says reporting levels have dropped because “many remain uncertain about where to report scams or doubt that a complaint will make a difference, creating opportunities for scammers to continue undeterred”.
The news comes with the Government poised to announce three major anti-scam moves beyond the confirmation of payee push already under way.
New Zealanders lost an estimated $2.3 billion to online scams in the 12 months to August 30 - up from $2b last year - according to the second annual the State of Scams in NZ report, compiled by Netsafe and the Global Anti-Scam Alliance (GASA).
Online shopping scams overtook identity theft as the biggest cause of losses - a concern with Black Friday and Cyber Monday just days away, Netsafe chief executive Brent Carey says.
Bar more action by authorities losses are likely to get worse, Carey says. The rise of AI makes it easier for scammers to create more scams, and scams that seem more realistic.
Deepfake video and voice scams are of particular concern, he says. That’s where scammers take footage or audio of someone you know, then use it in a scam such as when Zuru’s chief financial officer was recently almost taken in by deepfake video of his boss Nick Mowbray. Mowbray said the scam had “mind-blowing sophistication”.
The Netsafe-GASA survey canvassed 1071 adults and found 364 had lost money from an online scam, at an average of $3105 per victim. That was slightly less than last year, but with more people being scammed total losses increased.
Extrapolating that hit rate for New Zealand’s whole 18-plus population equates to the headline $2.3b figure - which is equal to 0.6% of gross domestic product.
Banks, prodded by letters from Commerce and Consumer Affairs Minister Andrew Bayly in February (although they also point out they announced their own effort in September last year), will later this month start implementing “confirmation of payee” or a system to match names and account numbers when money is transferred between banks, which Consumer NZ and others see as a key step to reducing fraud.
An MBIE survey last year, which drew directly on data supplied by ASB, BNZ, Co-op Bank, Heartland, Kiwibank, Rabobank, SBS, TSB and Westpac, said New Zealanders lost $198.4 million to scams involving bank accounts in the year to September 30, 2023.
Carey has been pushing for a national Anti-Scam Centre and a single Government minister to be in charge of online fraud (today there are six with some degree of responsibility) with his preference being Commerce and Consumer Affairs Minister Andrew Bayly.
“Confirmation of pay just means we’re catching up with the rest of the world, which is great,” Carey says.
“But as this report shows, banking is one part of the scam vector. We’ve got 53% of New Zealanders saying they’re being scammed in social media or telco settings [text messages are the most popular medium for scams, the report says] and others. So banks are just part of the equation.
“So we need a broad-based Anti-Scam Centre, not just a scam centre for the banks.”
Consumer NZ is also pushing for mandatory victim compensation from banks, as recently introduced in the United Kingdom. Currently, it can take months - and the intervention of the Banking Ombudsman - before victims gain full or partial compensation from a bank involved in transactions where the victim advocates say suspicious elements of the transactions should have raised red flags.
Carey says there’s a desperate need for a more straightforward reporting process, more help for victims to get their money back, and a more victim-centric approach overall. But he adds that blanket compensation for losses from banks “could lead to a false sense of security and people taking more risks”.
Bayly is due to kick off Fraud Awareness Week with a mid-morning speech that will address the single-minister-in-charge issue, and provide a substantial update on steps towards an anti-scam co-ordination between an alphabet soup of Government agencies and the private sector.
There is already a model across the Tasman where, in May last year, the Australian Government allocated A$53m to fund the set-up of the National Anti-Scam Centre over the next two years.
The centre will co-ordinate action, and data-gathering on scams between various law enforcement agencies and the likes of banks and telcos. The first phase of data integration was completed in June this year.
“Netsafe, together with the banks, Consumer New Zealand, and other consumer protection agencies, is urging for government support to establish an independent, broad-based anti-scam centre. This initiative would unify the efforts of private, public, and NGO [non-government organisation] sectors, enabling a co-ordinated response to the growing threat of scams,” Carey told the Herald on Friday.
“The 14,000 people who call Netsafe every year for help want action,” the Netsafe boss says..
Bayly will also announce regional alliance plans, the Herald understands.
In the meantime, 68% of scam attempts went unreported in the year to August, the Netafe/GASA survey says, a 9% fall on last year.
Only 17% of respondents with losses got all their money back, 43% tried but were not able to recover any money and 23% did not even try.
Reasons for not reporting a scam included shame and fear (scammers can threaten blackmail if they also steal personal data) but the biggest barriers were “I’m not sure who to report it to”, “reporting is too complicated” and “I don’t think my complaint makes a difference”.
A range of agencies promote their role in scam prevention and reporting to the public, including Cert NZ (a brand now being phased out with its integration into the GCSB’s Nationals Cyber Security Centre), the NSCC, Internal Affairs, Netsafe, police, IDCare and the Financial Markets Authority.
If you’ve been scammed, report it to the police and your bank as soon as possible, Carey says.
The Ministry of Justice-backed IDCare can help you with identity theft issues, such as putting a freeze on your records with all of the major credit reporting agencies at once.
“We need to take a more victim-centric approach to our recovery processes,” Carey said.
“The reporting and recovery approach needs to be made a lot simpler.
“Also there’s 40% in this survey who said that they are dissatisfied with the Government’s response to scammers - in particular, not seeing enough scammers being prosecuted. So I think that we’ve got more to do in that enforcement space.”
Enforcement can often be tricky, given many scams are executed remotely, often from West Africa or Eastern Europe.
But police have made a flurry of arrests this year with elevated anti-scam activity, including an August raid on the home of an Auckland teen who was using an SMS Blaster to send more than 700 scam texts per night (he was charged in October).
Two UK nationals were arrested in Central Auckland over a text scam that fleeced victims of up to $100,000. In June, an Auckland man was arrested and subsequently charged with 27 counts of fraud allegedly committed over Facebook Marketplace (which police at the time labelled “a hunting ground for criminals”).
Police followed that with the August arrest of a Whanganui man who officers allege acted as a mule for international scammers, allegedly laundering about a million dollars from at least five different Kiwi victims.
New Zealand police are being credited for assisting an FBI operation that shut down BreachForums, the United States site used by a ransomware gang that tried and failed to shake down MediaWorks after seizing the personal data of viewers who had participated in The Block NZ voting.
“To further strengthen victim support, Netsafe urges law enforcement and financial institutions to adopt a ‘victim-first’ asset recovery process. This includes transparent communication on the status of recovery efforts, dedicated support to help victims navigate the claims process, and faster disbursement of recovered funds,” Carey said.
Netsafe is bolstering its efforts to stop victims from getting scammed in the first place with the introduction this week of a scam-spotting tool in partnership with Google.
It will look for common tricks used by scammers to create realistic-looking fake web addresses, such as substituting a number “1″ for a letter “l” in a word, or swapping in a Cyrillic letter that looks very close to its equivalent in the English alphabet.
“It’s easy to miss these things with the naked eye,” Carey said.
According to Norton, fake e-shops may feature:
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
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