By her own admission, Sarah wasn’t her usual self.
Her husband required intensive medical care when she made the decision to invest $50,000 in a scheme recommended by a colleague.
She could see her crypto investment on the online portal she was given access to, along with the returns, which gave her comfort that it was a legitimate scheme that could provide income to help meet medical expenses.
But when she decided to withdraw funds, the scheme’s operators demanded more money to meet various requirements, such as paying for fees, meeting minimum balance rules and insurance. They threatened to retain her initial investment if she didn’t comply.
“They kept asking for more and more money to be invested in order to get my money out,” says Sarah, whose name has been changed to protect her identity. “The scammers give tight timeframes, giving you no time to breathe. I just gave in.
“I wasn’t thinking straight at the time and so I refinanced my home loan and started borrowing funds left, right and centre from friends and family to try to meet the requirements.”
In a rapid series of transactions over just a few weeks in August last year, Sarah transferred more than $800,000 from her Westpac account to a series of Australian bank accounts, including those held by ANZ and National Australia Bank.
That money has now gone, and is almost certainly overseas and out of reach of authorities.
Sarah is furious with Westpac and wants to know why it didn’t do more to stop the transactions, which which marked a radical departure from the way the account had been used for well over a decade.
But she is also frustrated with the actions of the receiving banks that allowed scammers to operate “mule accounts”, which are typically created using stolen identities or set up by people who are recruited to quickly move funds offshore.
Because Sarah is not a customer of the receiving banks, she says they won’t disclose information to her.
They are also not obliged to participate in a complaints process, even though the mule accounts are a crucial cog in the scam.
“Not once did any of the banks flag these as suspicious transactions. The banking system never picked these as suspicious on either side,” she says.
Push for reforms to hold banks liable
The Albanese government is due to release mandatory industry codes in the coming months that will outline the responsibilities of the corporate sector, including banks and telcos, when scams take place.
The Australian Banking Association says the codes should proportionately allocate responsibility and any potential compensation across all industries.
Consumer-focused groups Choice and the Consumer Action Law Centre want banks to reimburse more victims, shifting Australian laws closer to those in the UK where the financial institutions must promptly compensate most of their customers for scam losses.
In the UK, out-of-pocket bank customers are only held responsible if they have acted with gross negligence, which is a much higher bar than the equivalent laws in Australia.
The underlying principle behind the reform push is that people are not willingly scammed, and the banks and businesses, such as telcos and tech platforms, are the only ones with the means of combatting the increasingly sophisticated methods being used.
There is a view that the only way the corporate sector will adequately tackle the problem is if they are held financially liable for any losses.
The UK rules also compel the receiving bank, which hosts mule accounts, to share reimbursement costs.
A spokesperson for the Australian Financial Complaints Authority (Afca) says the complaints body does not have jurisdiction to look at the actions of a receiving bank in a scam transaction.
“There should be specific and clear obligations on the role of the receiving banks, including about how recall systems should work in practice,” says the spokesperson.
“We look forward to seeing the outcome of the government’s work in this space.”
Tania Clarke, the director of policy and campaigns at the Consumer Action Law Centre, says the government could immediately bring receiving banks into the Afca process before it releases its more comprehensive policy expected later this year.
“That’s a gaping hole that can so easily be plugged by a simple reform that is well supported,” Clarke says.
“They’re not customers of the receiving bank and they often feel so powerless.”
She says the broader reforms should make banks financially liable when their customers lose money to scammers, given it is the banking system being used to launder stolen funds.
“Banks, not their customers, need to tighten up their systems so that their customers can’t fall through the gaps and be an easy target for scammers,” Clarke says.
“Victims of crime blame themselves, and there’s often shame involved; the grooming is so powerful that it can’t be picked up in the moment. Once they realise what has happened, it’s too late.”
Victims left carrying the burden
With her permission, Sarah’s real name and details were provided to the relevant banks for responses, although they are restricted from commenting directly on her case due to privacy reasons.
The details of the Afca process are also not public, and there is likely to be disagreement on whether her bank’s response was adequate.
A Westpac spokesperson said the bank is investing significantly in scam prevention measures and working with authorities and regulators.
“When a customer transfers their money to a scammer, we work hard to recover the funds on their behalf where possible,” the spokesperson said. “We also encourage anyone making large payments to always use extra caution.”
The receiving banks say they try to recover funds when possible.
An ANZ spokesperson said the ability to recover funds depends on a number of factors including how quickly it is reported.
“In many instances, cyber criminals on-transfer funds within minutes, or use them to purchase cryptocurrency,” the spokesperson said.
NAB’s executive for group investigations, Chris Sheehan, says Australia is in the middle of a scam epidemic and that only collective action across all parts of the scam chain can help stop the crime before it happens.
“While we can’t comment on specific cases, we’re working to tackle scams involving money mules,” Sheehan says.
“Our team will always do whatever it can to get stolen money back, including supporting scam investigations led by other banks for their customers. This can be challenging when funds are often sent overseas or to cryptocurrency platforms.”
Research by Choice found that scam victims were left carrying the burden after big businesses like telcos, tech platforms and banks failed to protect them, with more than half of the victims surveyed saying they were under personal stress in the days leading up to the scam.
Scammers tend to contact people via websites, social media, text messages or phone calls, while bank accounts usually play a role in the transfer of funds.
Sarah, who is in her 30s, says the banks have “brushed her off” and failed to show empathy or accept any responsibility throughout the process, which is now before the complaints body.
“There’s been no duty of care whatsoever,” she says. “When I flagged this to them, no one asked what the reason was why I made the payments, or if there had been any significant change in my personal life.
“The banks are just robotic, they’re not human. But there is a human at the end of this and this scam has taken every cent of my life savings.”