Scambusters: The scammers, police and the hunt for invisible criminals

International scammers are estimated to be draining hundreds of millions of dollars from Kiwi victims yearly, with cases surging. Last year, police admitted it was impossible to identify overseas scammers and New Zealand investigators are ‘not focused’ on solving international scam crimes. So, how do you catch an invisible criminal? And what justice is there for Kiwi victims?

Scams are one of the most pressing challenges of our time, according to “The State of Scams In New Zealand 2023” report and survey by the Global Anti-Scam Alliance and Netsafe.

“Scams, evolving in complexity and frequency, remain a significant concern, and New Zealand, like many countries globally, stands at the forefront, seeking ways to combat this menace,” says the report.

Of 1000 people surveyed for the report, 17 per cent lost money to scams, with an average loss of $3165, amounting to a staggering $2.05 billion nationally.

The report found that scams account for 0.5 per cent of New Zealand’s GDP, highlighting a pressing concern for the nation’s economic health.

But the recovery numbers are sobering, with only 15 per cent of people managing to reclaim all their lost funds.

The rise of fraud and deception

There has been a sharp increase in fraud and deception crime in New Zealand, almost doubling in one year.

The Ministry of Justice New Zealand Crime and Victims Survey showed that fraud is now the most common type of offence overall.

There were 510,000 offences between November 2021 and November 2022, compared with 288,000 offences between 2020 and 2021.

Ministry of Justice sector insights, strategy governance and finance general manager Rebecca Parish acknowledged the digital impact driving fraud.

“Some additional analysis by the Ministry of Justice last year found that the increase we observed was driven by both fraud relating to the use or attempted use of a bank/credit card, and fraud which relates to the victim being tricked into giving money or a service.

“We also know that the large majority of fraud and deception offences, about 84 per cent, occur online or over the phone.”

Fraud and deception were the only offence types that had a significantly higher incidence in 2022 than in 2021.

“The rates of most crimes have remained steady compared to previous years, but fraud and deception have increased significantly.”

Fraud and cybercrime also had a high record of repeat victims - 55,000 people, making up 11 per cent of all scam victims.

Despite the increase, many fraud crimes are not reported to police at the same rate as other types of crime.

Previous cycles of the survey suggest that people report around 25 per cent of offences to the police, and fraud and cybercrime appear to be the least reported, at 6.5 per cent.

“Victims of these crimes were significantly less likely to have reported the offence to the police because their bank or credit card company took care of it - 47 per cent of respondents gave this reason - or because they reported it to another authority, 20 per cent of respondents gave this reason.”

Scam Q3

Police response to scams and fraud ‘woefully deficient’

The Independent Police Conduct Authority [IPCA] found major deficiencies in police responses to scam complaints.

IPCA chair Judge Colin Doherty said the 2022 report was initiated following several complaints about the way police handled fraud complaints.

“The authority has found that the police response to fraud falls well short of victims’ expectations and is failing to meet the challenges that the present fraud landscape poses.

“To meaningfully reduce the number of New Zealanders affected by fraud we recommend police lead the development of a fraud prevention strategy incorporating both public and private sector agencies.”

The IPCA upheld each of the seven specific complaints outlined in the report, but also acknowledged that addressing these deficiencies is only part of the solution to New Zealand’s overall fraud problem.

“Frauds are too often being regarded as civil disputes or minor offences. They are not receiving the priority they deserve, and the needs of victims are too often not being met.”

NZ Police director of financial crime Dave Lynch. Photo / Brett Phibbs

How to catch an invisible criminal

Despite the obvious prevalence of scams, holding scammers to account isn’t a walk in the park.

Scams can be reported to a variety of organisations including Netsafe and Cert, but when you’re a victim of a scammer yourself looking for justice, things become more complicated.

Auckland City CIB Detective Inspector Chris Barry told the Herald in July that the likelihood of tracking down overseas cyber crooks was slim given they usually resided in inaccessible regions across Russia, Asia and Africa.

Asked what police were doing to solve international scam cases, Barry said: “That is hugely problematic and to be fair that isn’t, at this stage, something we are trying to focus on.”

Police were instead focused on identifying local people who helped facilitate the crimes through the use of domestic bank accounts, and educating people to raise awareness about scams.

NZ police director of financial crime Dave Lynch said police preferred focusing on preventing people being scammed in the first place because there were so many variables when it came to returning funds.

“There’s no doubt that once [victims’ money is] moved offshore that does create additional challenges but that doesn’t mean to say that they can’t be recovered.

“I think globally, Interpol has been quite active in this space and promoted a number of ways from which potentially funds can be recovered.”

Scam Q13

A scam becomes fraud when the individual responsible for the scam gets and uses someone’s personal financial details or money under false pretences, for their own gain, according to police.

Fraud is a criminal offence and the maximum penalty for fraud is seven years, the same as the maximum for shoplifting.

“It really does come down to, firstly, making very quick reports back to the police and the bank,” said Lynch.

“There are things that the bank can attempt to do to recall the payments straight away, if that’s unsuccessful, then there are also various platforms that law enforcement can explore through asset recovery networks.”

Lynch said industries, governments, social media companies and customers all had a role to play in preventing scams, and there needed to be greater collaboration across sectors to stop scams in the first place.

“Customers need to exercise due diligence and personal responsibility, there’s a certain degree of apathy there amongst a lot of people.

“There is a responsibility on the customer to make sure they’re dealing with someone from a bonafide or legitimate organisation.”

Lynch said we needed to wrap around the elderly and vulnerable who were ”far more susceptible to scams”.

Serious Fraud Office [SFO] senior policy adviser Matthew McCallum said the office focused on complex fraud, bribery or corruption and most individual scam cases do not fit the criteria threshold for the SFO to investigate.

The SFO receives around 900-1000 complaints annually, many of which were more appropriately dealt with by other agencies, McCallum said.

“Financial crime is increasing in both scale and complexity. Rapidly evolving technology and more permeable global borders are opening new avenues for committing fraud as well as making tackling it more complex and resource-intensive.

“Additionally, local and international experience shows that fraud and corruption increases during an economic downturn, but may take time to be detected.

“Financial pressures may make people more likely to commit fraud, while desperation can make vulnerable people more susceptible to being deceived.”

How to get help

Internal Affairs anti-spam and scam awareness: Forward text scams for free to 7726

Cert NZ: Individuals, small businesses can report a cyber attack, get advice: www.cert.govt.nz

Financial Markets Authority: https://www.fma.govt.nz/scams/

Privacy Commissioner: Complaints about privacy breaches. 0800 803 909 or privacy.org.nz/your-rights/making-a-complaint/

ID fraud: Internal Affairs advice: dia.govt.nz/Identity - Are-you-a-victim-of-identity-theft

IDCare: Assistance freezing your credit record, regaining control of your online identity after an ID theft: idcare.org

Netsafe: Report online bullying, hate speech, dangerous content: netsafe.org.nz

NZ Police: Report cybercrime online scams, online child safety issues: police.govt.nz/advice-services/cybercrime-and-internet

If you believe you are or have been the victim of fraud, contact police at 105.police.govt.nz, or call police on 105.

• Scambusters is an independent editorial series brought to you with the support of the Banking Association.