Beating the scammers
Australian banks are collaborating to tackle the cyber crime challenge with a range of measures, including ‘confirmation of payee’ systems. Westpac experts outline what to expect.
From payment redirection scams to data theft and phishing, Australians are losing billions of dollars to cyber criminals each year. But as scammers become more sophisticated, Australian banks are stepping up their defences through the Scam-Safe Accord – a collective initiative for disrupting, detecting and responding to criminal scam activity.
A report from the ACCC’s National Anti-Scam Centre shows Australians made more than 601,000 scam reports in 2023 and lost AUD 2.74 billion to scams.
The Scam-Safe Accord between Australia’s commercial banks, building societies, credit unions and community-owned banks is built on six initiatives. These include biometric checks to prevent misuse of bank accounts; warnings and payment delays to alert customers to potential scam payments; a major expansion of intelligence-sharing across the sector; limiting payments to high-risk channels; implementing an anti-scams strategy; and an AUD 100 million investment in a new industry-wide ‘confirmation of payee’ (CoP) system.
With 15.4 billion transactions worth AUD 2.5 trillion occurring annually across the banking sector, the industry-wide CoP system alone is a significant undertaking.
Westpac IQ asked Peta O’Brien, Managing Director, Client Engagement, Global Transaction Services, Ben Young, Westpac’s Head of Fraud and Financial Crime Insights, and Chris Campbell, Executive Director, Head of New Payments and Payments Policy, to outline the purpose of the accord, what’s involved and what customers should expect as different phases are introduced and expanded.
The Scam-Safe Accord represents collective action to counter cyber scams. What is the significance – and what are the benefits – of this kind of industry-wide collaboration?
Peta O’Brien: We are all part of the value chain for customers. Financial services industry participants are working together to minimise the impact of scams and fraud. The issues these create are an impost to our customers and the economy as a whole.
We have significant resources pointed towards managing the risks and outcomes of fraud and scams. These are resources I am sure we and our customers wish were engaged in other client focussed activities that created economic benefits. So it's important we all work together to reduce the potential for scams and frauds to occur.
Scammers are growing in sophistication. How does the accord respond to this?
Ben Young: The accord will standardise many of the fraud and scam controls across the various banks so that no weak link will be left where scammers can focus. Having initiatives focussed on the receiving bank party also, is a key step forward of the accord.
Australians are still losing millions of dollars to scams every month, so it's important to keep the pressure on and to keep innovating on ways to prevent scams.
When the Scam-Safe Accord measures are in place, scammers aren't just going to roll over and say: ‘Oh well, it's all too hard, so now let's stop scamming’. We know that they will change their methods and try new things. This initiative will certainly make it harder for them, but they will try to evolve around that.
The Scam-Safe Accord outlines six key initiatives that all Australian banks have agreed to implement to improve scam protections across the sector. Which initiatives will customers – and their customers – notice the most, and how can they prepare?
Chris Campbell: The most material are the CoP piece and the biometrics for onboarding. When you make a payment in Australia at present, you give the BSB, account number and the name that you want to pay and, while that BSB and account number are validated, the name is there really for your own labelling.
However, at the end of the accord’s delivery, you will get confirmation that the name matches the recipient account and that will be quite a big change for those many millions of payments.
Ben Young: The biometric check, such as fingerprint or the customer’s face, will be required for new customers opening accounts to verify their identity. Once all the banks are collecting a biometric, it will help to standardise at a higher level the quality of onboarding for new customers.
Peta O’Brien: These kinds of initiatives are aimed at reducing scams occurring with the recipient being confirmed as the party the payer believes they are paying and alerting them to take action if necessary, through more due diligence or not making the payment at all. As we move to a real time payment environment, there is less time and friction for incorrect payments to be stopped, so it is critical we provide as much information as possible to give payers certainty. The CoP system will certainly reduce mistaken payments. The problem is that sometimes it’s too late because by the time customers are aware of the scam or fraudulent payment and they inform their financial institution, the funds have gone and are difficult to retrieve.
It’s not just consumers that are financially impacted - but also small and large organisations who are losing funds through scams such as business email compromise, so it impacts all parts of society.
A similar measure, introduced in the UK in 2020, resulted in a 35 per cent reduction in misdirected payments in the first year. What can we learn from that experience?
Ben Young: A key learning is that through more real time data sharing between sending and receiving banks, some scam can be more accurately attacked than either party acting on their own.
But obviously the scammers know what name checking is all about and will evolve as they have in the UK. We need to watch out for their next move and develop a response.
How will the CoP system improve on present measures like PayID and PayTo?
Ben Young: PayID and PayTo are versions of this next generation of payment. PayTo is a fast way to make payments using your BSB and account number or your PayID, which might be your phone number, for example. But a large number of payments are not made with PayIDs, so this will close that gap and provide confidence that you are paying who you think you are paying.
How will CoP work in practice? What should customers expect?
Chris Campbell: The CoP system will look up the account name associated with an account and will come back and say, yes, this account belongs to that person or not. When you add a payee to your payee list in the Westpac app or website, that’s when the lookups and confirmation will happen.
Westpac has already started rolling out protections for all six Scam-Safe Accord initiatives. How are you ahead of the game on cyber security and payments?
Ben Young: Westpac has completed many of the initiatives although some are not visible to customers.
For example, we’ve participated with the industry blacklist on the Australian Financial Crimes Exchange since it was founded. We also have Westpac Verify – when you add a new payee to a BSB and account number, it checks to see if the account details you’ve entered have been commonly used to help us protect you from payment redirection scams or mistaken payments.
We’ve also rolled out initiatives like payment delays and warnings, and Westpac SaferPay is the most advanced version of that. More than just a static warning, it's a dynamic series of questions that are prompted when a customer makes a payment that looks a bit unusual to us. It’s triggered by a series of AI-related indicators that allow us to zero in on a very small subset of payments that are scams and pull them out of the batch.
At a high level, the AI can indicate if a customer is being coached into making an unusual payment and then we can ask them a question. One of the scams that it's particularly effective with is what's called the ‘Hey Mum’ scam, where people receive an urgent text or WhatsApp message from a scammer pretending to be a family member who's in financial trouble. We've had some great wins with that already.
When will elements of the Scam-Safe Accord be rolled out?
Chris Campbell: Different parts of the accord will come online at different times, but customers should expect to see some changes from now through to the end of 2025. In September we are releasing Westpac Verify in our key corporate payments channel.
Even with these new measures in place, it’s essential that we all remain vigilant, because scammers will change their tactics, so we’ll ensure that our security measures evolve to help protect customers.
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