Customer losses will be reimbursed if banks fail to meet the new scam protection commitments
The New Zealand Banking Association (NZBA) has announced that banks are introducing new measures seeking to safeguard New Zealand consumers from criminal scammers and align the country with best practices around the world.
“These new scam protection measures are a huge step up in the fight against scams,” said Roger Beaumont, the NZBA’s chief executive, in a media release.
The new consumer protections will include:
The NZBA said the new consumer measures aim to build on prior anti-scam initiatives.
“Banks already do a lot to identify and help prevent scams, and these new measures will enhance tech solutions to help protect customers from increasingly sophisticated scams,” Beaumont said.
The NZBA said the banks’ new consumer protections seek to support a fresh approach to compensation for losses for authorised payment scams.
“Global experience shows scam prevention is the best way to protect consumers from scam losses,” Beaumont said.
Banks will reimburse eligible customers for all or part of their losses in case of failure to meet the five new scam protection commitments and will continue to compensate them for losses if somebody accessed their banking services without authority. Banks may reimburse for an amount above what is stated in the Code of Banking Practice if deemed appropriate.
“The new compensation approach recognises shared responsibilities for protecting New Zealanders from scams,” Beaumont said. “Banks are stepping up their customer protections and will be accountable for those measures, but they cannot take on full liability for scam losses that are beyond their control and may, for example, start with a fake ad or chat on social media, or a fake search engine result.”
The NZBA said updates to the Code of Banking Practice will include the new scam protection commitments and the expanded compensation approach.
“Consumers are also encouraged to take reasonable care to protect their banking,” Beaumont said.
The present and previous commerce and consumer affairs ministers supported New Zealand’s banks in developing the new compensation approach and a fair and broad scheme, Beaumont added in the media release.
Beaumont expected banks to progressively roll out the new consumer protections over the coming seven months, with the final rollout of the measures to be in place across 13 banks and the updated Code of Banking Practice to go live at the end of November.
“This timeframe reflects the considerable time and effort that will be required to put enhanced customer protection measures in place across more than a dozen banks,” Beaumont said. “This timeline aims to enable banks to ensure the new measures go smoothly and work on priorities such as the design and implementation of changes to their systems, processes, and staff training.”
“As the government has acknowledged, the scam ecosystem is far broader than just banks,” Beaumont said.
Beaumont explained that a cross-industry and government agency approach is necessary to prevent scams as banks cannot fight scammers by themselves.
“We call on other industries such as telcos, social media companies, and global tech platforms to bring in their own scam protection measures,” Beaumont said. “If other industries do so, we can move from a world-class protection system to world-leading.”
Bell Gully’s Sophie East, Tim Fitzgerald, Alix Boberg, and Stewart Komie wrote in the article Fraud and Scams Update: Banks commit to new protections – and reimbursement - for scam victims that online frauds and scams are a global concern.
“Regulators, legislators, and Courts around the world have all had to grapple with how to respond to the increase in sophisticated online frauds and scams,” they wrote in the article. “These industry-led reforms in New Zealand aim to strike a balance that recognises both that prevention is the best protection, and that both banks and their customers have a role to play in avoiding losses from scams.”
