A family caught up in a vicious scam involving three major Australian banks has described the situation as “disgusting” as they lost a staggering $1.1 million.
Cindy, who asked that her surname not be used, said her “typical baby boomer” parents sold their Sydney home they had lived in for 30 years and made a profit of $1 million.
However, the couple, who worked as an accountant and a nurse, rose from “incredibly poor villages” living in mountain huts in Fiji, to become the first in their family to attend university.
Her 67-year-old mother, a nurse and breast cancer survivor, and 70-year-old father were looking forward to enjoying their retirement.
Cindy’s father was investigating an opportunity to invest their home profits, but instead it turned into “ruin” for the family as they fell into a bond investment scam.
“My dad is a chartered accountant, he’s very knowledgeable about finance, which is another thing he was able to fall victim to, which shows you how sophisticated these scams are,” she told news.com.au.
Cindy’s father did his due diligence – checking details with the banking regulator, searching ASIC records, checking employee names on LinkedIn, and even showing investment documents to his bank branch manager.
However, he was scammed.
He wired $800,000 and $300,000 to one of the big four banks and another $300,000 — and despite a fraud alert that led to his account being frozen for that transaction, it later continued.
The family reported the incident to police, and Cindy said they were shocked by what was revealed about banks failing to properly verify identity when opening bank accounts. She said police told her that one of the fraudsters’ bank accounts was opened with a photocopy of an expired foreign passport.
Cindy criticized the banks for their involvement in allowing the fraud to occur.
“Australians have nowhere to go. And now the system is set up so that the banks have all the power. They are knowingly transferring money out of the country and contributing to fraud,” she said.
“The truth is that Australian banks are complicit in facilitating money laundering and perpetuating a crime against hardworking Australians, particularly seniors. No matter how educated people are and how well they do their homework, they have never had the ability to check whether a bank account was fraudulently created.
“It angers me that banks blame people for falling victim to fraud – no, this is a crime that Australian banks have made easy for Australian citizens.”
Sydney said the $1.1 million her parents had in their possession was clearly sent overseas shortly after it arrived in the scammers’ account.
“They had the opportunity to change the course of our family’s life and my father had put his trust in the Australian banking system and now he was losing money,” she said.
“It’s really hard to put into words how much stress and sadness it created and sadness that could have been easily avoided.”
I have been very critical of the lack of transparency on the part of the banks.
“Banks know that people lose this money and never get it back because there is no comprehensive way for these people to be questioned and force the bank to show that they did not follow the correct procedures, unless they go through the police or civil lawsuits,” she said.
“Most people who have lost their life savings can’t afford to do that. They know they can get away with it and they won’t change the way they do business.”
This comes as Australian banks are increasingly being criticised for their handling of fraud. The multi-billion dollar profit machines have been heavily criticised for their response when customers fall victim to fraud in what has been described as a “crisis”.
Australians lost a whopping $2.74 billion to scammers in 2023 – that’s hundreds of dollars per household as people are already under pressure from rising living costs.
A new survey has revealed that banks need to do more to protect fraud victims.
A new poll has shown that nine in ten Australians believe scams are becoming more sophisticated and that anyone can fall victim to them, no matter how careful they are.
The study also found that 75 per cent of Australians expect banks to keep their money safe from criminal fraudsters, and if they fail to do so, they expect it to be returned to their accounts.
Stephanie Tonkin, CEO of the Consumer Labor Law Center, said she was not surprised by the results.
“Instead of accepting responsibility, our banks are exacerbating injustice, blaming their customers who pay them to keep their money safe from increasingly sophisticated crime and fraud,” she added.
“88% of people surveyed, and 91% of those over 55, believe the sophistication of these crimes means anyone can become a victim. Almost every Australian now fears their money will be stolen because their banks are not doing enough.
“The burden remains on the customer to avoid being defrauded by malicious forces over which they have no control, and banks do little to mitigate fraud in order to keep people’s money safe and secure.”
Many banks only reimburse 2 to 5 percent of the money stolen through fraud, despite the astronomical profits banks record year after year.
“Our banks’ position on this crisis is absolutely unethical, and I criticize it,” Tonkin added.
In May, Commonwealth Bank of Australia reported a profit of $2.4 billion in the six months to the end of March, while Westpac’s first-half profit was $3.34 billion.
Meanwhile, ANZ reported a cash profit of $3.55 billion, while NAB made $3.5 billion.
According to the survey results, 76% of people agreed that requiring banks to compensate fraud victims by law would be a good incentive for them to invest in technology to prevent fraud.
The UK has introduced world-first laws that force banks to compensate fraud victims as an incentive to cut losses and invest more in detection and prevention.
Under the UK system, customers are paid back within five days – with the sending and receiving banks taking responsibility for the loss. Customers are rarely denied unless they have acted fraudulently or grossly negligently.
But there has been strong resistance in the Australian banking system to introducing such a scheme, with the Australian Bankers Association claiming it would create a “honey trap effect” and encourage criminals to target Australians more often.
Polls show that 75% of Australians believe the government should introduce laws to force banks to return money to customers who have been robbed through fraud.
Financial Services Minister Stephen Jones said last year that a new, tough code of practice for banks had been developed.
The Albanian government plans to introduce an anti-fraud law to parliament soon, which it claims will set a very high standard for banks and companies to prevent fraud.
But Australians are skeptical. The survey found that fewer than one in three people believe the country is on track to have the best anti-fraud legislation in the world.
Sarah Sharples@news.com.au
