Australia lags behind on scam victim reimbursement

While other countries have implemented stronger protection and reimbursement programs for fraud victims, Dr. Australia continues to leave many people bearing the financial burden of banking and regulatory failures, writes Kim Sawyer.

WHY ARE SCAM VICTIMS NOT REFUNDED AS IN other countries?

This is a question asked by fraud victims, especially those who have suffered huge losses. In England in 2025 88% of money Losses lost to authorized push payment scams were refunded to victims, and 82% of claims were closed within five business days.

In 2025, New Zealand Banking Association launched a scheme requiring banks to pay compensation to victims up to $500,000 if they fail to protect customers. In Australia, fraud victims who have suffered huge losses cannot receive any compensation and are subject to years of blocking by banks.

In the second half of 2023, the Australian Financial Complaints Authority (AFCA) received complaints from 17 victims about losses exceeding $1 million. They were not paid anything back. Refund rate for APP fraud in Australia: less than 10%well below that England and even in the US where big banks average 75%.

Most fraud losses result from failure to obtain creditor approval, where the customer sees their name on the accounts to which the recipient transfers their money. Creditor verification reduced fraud in the Netherlands 81% and in the UK 35%. It became mandatory in the UK in 2020 and is recommended by the Australian Competition and Consumer Commission (ACCC) as early as 2020. But banks resisted.

Consider an analogy. A check was written to Jill Doe. If Jill Doe wants to cash her check, she will need to prove that she is Jill Doe. If someone other than Jill Doe cashes the check, the check writer is not responsible.

This analogy relates to the fraud we are exposed to. We transferred money to term deposit accounts stated to be in our name, but the fraudster laundered the money within 24 hours and withdrew it without showing identification. Banks could not recognize the customer and could not detect money laundering.

The government knew that the banks’ systems were flawed.

On March 12, 2024, former Deputy Treasurer, Stephen Jonesgave an interview about scams, here he said:

Two years ago we were talking to them and said it was okay to confirm the payee… If you entered the wrong number because there was no alphanumeric match and you don’t know if you sent the money to Hans instead of Jacquelin. This is a big mistake when applying online. They were so resistant to extending creditor approval throughout the banking system that they now agreed it should be a core functionality.

Now banks are issuing creditor confirmation, but five years late.

In the same interview, Stephen Jones said:

“I think we have to add liability and responsibility, there will be a connection between those two things… accountability has to apply, but it has to be where the responsibility lies.”

However, the Government refused to accept that banks were responsible for not implementing creditor approval, that banks were responsible for not knowing their customers, and that banks were responsible for not detecting money laundering. The government refused to accept that an error in a bank’s systems meant that the bank was liable.

Car manufacturers pay when their cars have a fault or they have to recall cars. Why should fraud victims pay for banks’ mistakes? Why are victims of fraud not compensated?

It is clear that the Federal Treasury has always opposed repayment, or at least the UK model. It goes against public expectations. A. Essential Media’s survey It has been revealed that in 2024, the majority of Australians (75%) expect banks to protect their money from criminal fraudsters and return them to their accounts if they fail to do so. But the Government refused to take action.

The Government’s attitude now appears to be changing. Australians who lost up to $3,000 due to fraud Fraud Prevention Framework. The refund proposal would require banks, telcos and digital platforms to pay compensation to victims who were defrauded through their services.

Deputy Treasurer Daniel Mulino He told ABC radio that the automatic payment system made sense because scams under $3,000 represented a large share of the total number of claims but a relatively small share of losses. “Fraud is a very insidious form of crime.” HE in question.

The proposal pits those who lack natural justice, who were not defrauded, and who were defrauded of less than $3,000, against those who have suffered huge losses and will have to fight for repayment. Those most affected are those least protected.

Consider an analogy if applied to the National Disability Insurance Program (NDIS). The most disabled will not be insured, the least disabled will be insured. Payments to fraud victims should not be based on an arbitrary threshold or at the discretion of banks. There must be a reimbursement formula that applies equally and fairly to everyone. This is the approach in other countries as well.

The chargeback encourages banks to protect customers and deters fraudsters who know they’re going against the banks. The UK knew that repayment was the key to preventing fraud. Reimbursement should have been a priority for both regulators and the Government. Instead they chose to defer to banks.