By Marcus David
Director of Professional Services
Although the often repeated motto “Caveat Emptor” or “Let the Buyer Beware” is sound advice for avoiding broker scams or tricky online merchants, regulators like the Australian Securities and Investments Commission (ASIC) are encouraging banks to give their customers more fraud protection.
ASIC has urged Australian banks to upgrade their measures to safeguard client funds after a report revealed that 31,777 Australian bank customers lost AU$550 million to fraud in 2022.
ASIC’s scam prevention, detection and response review examined steps taken by four major Australian banks with conclusions on how to improve customer security.
Scam Protection Progress Has Been Made, But Improvement Is Needed
Although Australian banks have stepped up their efforts in protecting customers from fraud, the study found that progress has fallen short of targets. Also, strategies to combat scams were more developed in some banks than in others.
One of the key problems was an “inconsistent and narrow approach for determining liability.” This is especially true in the case of frauds that involve transactions the customer authorized compared to clear cases of hacking.
Also, ASIC found that banks often failed to support clients’ claims and showed gaps and inconsistencies in detecting and stopping scam payments.
Statistics were sobering. ASIC found that bank customers absorbed 96% of scam losses and banks detected and stopped only 13% of scam payments. The reimbursement and compensation rate was just 2%-5%. The amount of reimbursement averaged just 11% of losses.
However, one crucial takeaway from ASIC’s report was that customers who took an active part in the fund recovery process by initiating and following up on complaints were far more likely to retrieve their funds than those who depended entirely on the banks to do the right thing.
U.S. and European Regulators Also Take Steps to Protect Customers from Scams
Australia isn’t alone in addressing the growing problem of fraud, but it is interesting to note that ASIC is encouraging banks to take direct action.
The European Parliament’s Committee on Economic and Monetary Affairs (ECON) is drafting legislation to protect consumers from crypto scams. The provisions deal mainly with ensuring that companies offering cryptocurrency as a product or a payment method provide accountability and full transparency.
This means they will be required to report transactions and require some type of identification. This applies to companies based in the EU and those from outside the region who sell their products to EU customers.
In addition, the U.S. Securities and Exchange Commission (SEC) has proposed legislation that would require brokers and registered investment companies to provide transparency about crypto assets and more effectively warn customers about risks.
These measures are encouraging, yet ASIC’s review stands out because it puts the onus on banks to take notice of suspicious activity and take more responsibility for preventing and combating broker scams.
What Should You Do If You’ve Lost Money to Fraud?
Since ASIC is a regulator, it has the ability to put pressure on banks to improve their procedures for detecting scams, protecting customers, and compensating them.
This is good news. However, it’s still important for customers to take active steps in the fund recovery process and not be deterred. One important takeaway from ASIC’s report is that customers who complained and were persistent in following up with them were more successful in getting their funds back than people who remained passive.
It’s clear that many banks won’t move ahead without pressure. That’s why it’s important to have fund recovery experts in your corner when you are pursuing a claim against a crypto or broker scam.
MyChargeBack Will Assist with Fund Recovery
If you have lost money to a cryptocurrency scheme or a broker scam, seek fund recovery assistance right away. Consult with MyChargeBack experts and get started with your fund recovery claim. We have extensive knowledge and working relationships with regulators and more than 450 law enforcement agencies around the world, as well as solutions that can improve your prospects of getting your cryptocurrency back.