In our embrace of online shopping, we have become prime targets for scammers. And when bank accounts are emptied, Australians have to jump through hoops to get their money back, if at all, writes James Fitzgerald Sice.
Mike Daws was finally able to visit his mother-in-law for her 101st birthday in the US in May 2022 after two years of Covid border restrictions, only for the trip to be ruined by an online scam that almost cost him $8000.
Mike’s payment details had been saved when he bought a $189 fridge online from Kogan – one of Australia’s largest online retailers. This meant that the scammers could access his credit card information when they hacked into his email address through an unprotected computer. After that the floodgates were open, and they stole $8192.95 from Mike by transferring his money to several separate Kogan gift cards.
But surely there was some sort of protection in place? Well, yes and no. Two-factor authentication was in place during these transactions, but where was the confirmation sent to? The same email address that the scammers could access.
Taking the reasonable steps to prevent anything else from being stolen, Mike called his bank, Westpac, to cancel the card and dispute the charges. Approximately four excruciating hours later he was able to cancel his credit card. However, he would have to wait 45 days to hear back from Westpac about getting his money back.
Hard luck mate, it’s your loss
“Kogan basically said, hard luck, change your passwords. That’s really all I got from Kogan through the whole process. Hard luck, it’s not our problem, the bank’s authorised it,” Daws said.
After the end of the 45-day period, Westpac finally got back to Mike. The banking giant told him it was unable to do anything about getting his money back because the two-factor authentication had been used.
“The bank didn’t care … Basically, the two companies involved in this, Kogan and Westpac, were hiding behind me. You’ve authorised it, so hard luck.”
A sadly familiar tale
Mike’s story is not unusual. Our increasingly cashless economy may be much more convenient, but an over-reliance on the online world makes anyone with an internet connection a potential target for scammers. Last year alone Australians lost more than $2 billion according to the ACCC.
Between January and June 2022, just six months, the Australian Competition and Consumer Commission’s Scamwatch received 10,153 reports, with a total of $295,164,188 being lost to scams in Australia. According to Scamwatch, the top five most popular scam ‘‘delivery methods’’ are mobile applications, over the phone, social networks, email and the internet.
Amount lost and number of reports
|Number of reports
|Amount lost: $34,070,567
|Amount lost: $37,877,674
|Amount lost: $95,137,362
|Amount lost: $37,139,500
|Amount lost: $52,764,390
|Amount lost: $38,174,695
|Number of reports
|Amount lost: $94,978,314
|Amount lost: $68,939,638
|Amount lost: $38,747,620
|Amount lost: $36,316,396
|Amount lost: $31,325,757
|Amount lost: $13,672,658
|Amount lost: $9,128,065
|Amount lost: $1,384,562
|Amount lost: $629,664
|Amount lost: $41,514
|Amount lost: $0
Image and Data Source: ACCC, Scamwatch ‘Scam Stats’
‘Building better safeguards’
What does the umbrella body for banks say about Mike’s case? Nothing in particular. The Australian Banking Association would not comment on individual cases. It responded to questions from MWM with a prepared statement which said, in part:
“Australian banks are working continuously to increase safeguards to protect and support customers against frauds and scams.
“If a customer experiences anything irregular in their transactions, or they receive contact from someone that doesn’t sound right, such as asking for their personal information, they should always contact their bank as soon as possible.
“The bank will be able to put a stop on their account immediately if they think there is irregular activity occurring.
“Over the course of last year, Australian banks spent around $19 billion on IT systems to build resilience including against frauds and scams.
“Combatting card fraud and scams is the responsibility of key sectors and partners banks work with including online shopping platforms, telco providers, governments and law enforcement agencies to combat this growing challenge.”
So, what’s the solution? Don’t buy fridges from Kogan? Throw away all your computers, stop using WiFi, and keep your savings in a glass jar under your bed? Funnily enough the ACCC has repeatedly provided the solutions to preventing these scams from occurring. Such as its three-step plan “Making Australia the world’s hardest target for scams”.
“First, we need to stop scammers reaching consumers by disrupting the means by which they contact would-be victims – whether through phone calls, SMS, email, social media,” said ACCC chair, Gina Cass-Gottlieb.
“Second, we need to better educate consumers so that if a scam contact makes it through to them, they are able to recognise it as a scam. Scammers are increasingly sophisticated and cunning in the ways they trick consumers and businesses, so this is a key challenge to address.”
“Finally, we need measures in place so that if a consumer is convinced to attempt to transfer funds to a scammer there is a safety net there to prevent this from happening.”
Thankfully, Mike got his money back after the Australian Financial Complaints Authority (AFCA) investigated his case. But should it really have gone that far in the first place?
“The only reason I got the money back was because I kicked up such a bloody fuss, they probably thought it’s just better to give it back,” said Daws.
As for Kogan, this self-styled avatar of the ”Next Generation of online retailers” (according to its annual report) could have afforded to compensate Mike with the company reporting $42 million profit in its 2021 annual report.
This is a problem which can be fixed, and could save Australians thousands of dollars if the government listened to the ACCC’s recommendations around tightening scam laws.
MWM sought comment from Kogan and Westpac. Westpac declined to comment, citing customer confidentiality.
Photo above:Grant Stuart
Michael West Media