COVID-19 lockdowns lead to rise in bank and credit card fraud as more people work and shop from home

One in nine Australians have been the victim of personal fraud, with card fraud being the most common type due to the growing number of people banking and shopping online due to COVID-19.

Card fraud occurs when criminals steal your bank or credit card details to illegally access your account and steal money.

The Australian Bureau of Statistics said 11% of Australians, or more than 2 million people, experienced personal fraud in 2020-21, up from 8.5% in 2014-15.

This increase is due to an increase in card fraud, which was the most common type of fraud, followed by scams.

Around 1.4 million Australians were victims of card fraud in 2020-21, almost 7% of the adult population and a higher rate than in 2014-15.

And the main victims were people working from home during the coronavirus shutdowns, with people aged 35 to 54 being the most affected.

People between the ages of 35 and 54 were more likely to be victims of card fraud. (Provided: Australian Bureau of Statistics)

Fraud involving bank and credit card transactions reached $490 million in the 2020-21 financial year, according to industry self-regulator the Australian Payments Network, up 9.2% from last year. the previous year.

Total spending on cards increased to just over $847 billion in fiscal 2021, amid increased online spending during COVID-19 shutdowns.

Card not present fraud, in which card details are stolen and used to make purchases, accounted for 90% of Australian card fraud, while fraud involving lost and stolen cards has fallen.

Financial institutions, credit card companies and merchants are required to reimburse losses due to payment card fraud, provided that consumers do not give their financial details to anyone else.

“Several charges”

A woman in a brown dress is sitting at a desk and working on a laptop
Samantha Gray and her husband discovered that criminals were taking small amounts of money each month.(ABC News: Daniel Irvine)

Samantha Gray, 29, a retail worker, found out the hard way the scammers were using her bank debit card to watch the Netflix streaming service.

“I noticed I had two charges in the same month for Netflix and I thought that was very weird and not fair,” she said.

Mrs. Gray and her husband only discovered the fraud because they started performing a monthly expense audit.

They discovered that the card had been used illegally for two years on Netflix and about $300 had been taken from the account.

But the bank only refunded part of the money.

“They said maybe they could get some money back through their fraud department,” Ms Gray said.

“They never guaranteed I would recover from it and it only lasted a few months.

“I think they could probably repay more. I know with my experience I certainly didn’t get the full amount back, unfortunately.”

And it wasn’t the first time Ms. Gray had been the victim of card fraud.

Several years earlier, criminals drained money from another account and went on a spending spree.

“There were all these really weird accusations that I definitely didn’t make.”

“I called the bank and they were like, ‘Yes, your card was hacked.'”

Card Fraud

A woman wearing a white t-shirt and black blazer sits and smiles at the camera.
Australian Banking Association chief executive Anna Bligh said card fraud remained a serious problem.(ABC News: John Gunn)

Former Queensland Premier Anna Bligh heads the Australian Banking Association, which represents the country’s banks.

She said ABC Financial Institutions spend billions of dollars on technology to catch scammers.

“When we look at the picture of how many of our transactions are vulnerable to [card] fraud is actually a small number, $490 million, which sounds like a lot of money, but in the context of trillions of dollars of transactions each year, I think that tells us that our system is relatively safe,” she said.

Commonwealth Bank said earlier this month that it would dramatically increase its resources and technology to fight scammers.

It has introduced new artificial intelligence technology to detect suspicious and unusual behavior on its digital banking platforms and alert customers to potential scams.

Ms Bligh said she did not see a time when financial institutions would not reimburse losses for most card fraud.

“They want to protect their customers’ money,” Ms Bligh said.

“It’s important for their reputation.

While financial institutions are responsible for reimbursing fraudulent transactions, there are gray areas.

You probably won’t get a refund if you click on a fake online banking link or if you deliberately or accidentally reveal your personal identification number (PIN) to someone else.

Ms Bligh said that in the majority of cases of card fraud, customers would get a refund.

“So in most cases where the customer hasn’t breached the terms and conditions of their card, so they haven’t given their card to someone else to use, they don’t ‘didn’t give his PIN, in most cases it was a fraud [they will get a refund]“said Ms Bligh.

Morningstar banking analyst Nathan Zaia said card fraud refunds don’t represent a huge amount of money for financial institutions, given how much they earn on their product line.

“I think if you look in the context of bank earnings, it’s not a major issue.”

“Customers want to know that their money is safe with a bank.”

Scams on the rise

As most card fraud victims are reimbursed and the fraud rate has dropped in 2021 compared to FY 2018, Gerard Brody of Melbourne’s Consumer Action Law Center sees scams as the biggest threat, especially for the elderly and vulnerable.

In a recent report, the Australian Competition and Consumer Commission (ACCC) said Australians lost more than $2 billion to scams last year, a record amount.

“At Consumer Action, we are seeing more and more complaints about scams,” Brody told the ABC.

“I think it’s increased significantly during the pandemic period, where people are engaging in a lot more e-commerce at home.”

Mr Brody wants to see new UK-style protections put in place here, including an eventual refund code that requires banks to offer compensation to people who are tricked into sending money to criminals.

Documents released by corporate regulator the Australian Securities and Investments Commission earlier this year under freedom of inflation laws revealed that Australian financial institutions were fighting proposals for new bonds aimed at prevent scams or reimburse customers, including confirmation of beneficiary service for electronic payments.

Banks say blanket refunds will further encourage scammers and customers may take less care to protect their bank details.

Action is being taken by the authorities against SMS scams, with mobile providers being forced to identify, block and trace SMS scams or face fines.

Spot the scammers

How to spot a scam

Unauthorized transactions

  • When someone transfers money from your account without permission
  • A payment to a person or business you don’t know
  • A cash pick-up at a location you haven’t been to
  • A transaction on a day when you haven’t used your account
  • A payment made twice

Credit card scams

  • Unusual purchases on your credit card
  • Check credit card statements regularly
  • Report unusual transactions to the bank

The federal government’s Moneysmart website recommends that consumers check their bank and credit card statements regularly and familiarize themselves with the different types of transactions in their accounts, which makes it easier to catch an error.

Samantha Gray has found a solution to fight scammers, especially criminals who take small amounts of money from accounts in the hope that account holders won’t notice.

It has set up a separate debit card for regular payments for services such as Netflix.

“So we put money in and when that money is gone, it’s gone,” she said.

Consumers should report scams to their financial institution, the police and government agencies, including the ACCC, ASIC and the Australian Tax Office.

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