A range of new anti-scam measures announced by the Government and banks will give greater leeway for providers to act; will they put a dent in growing losses?

The Government is introducing new measures it hopes will help rein in a rising number of online scamming.

Announced during International Fraud Awareness Week, they include protections for providers that take “reasonable, good faith steps to disrupt suspected scams,” Scott Simpson, the minister of commerce and consumer affairs says.

Also known as safe harbour provisions, they will allow entities such as banks, telcos and digital platforms such as Meta and Google to act quicker to block suspected online scams, without risking prosecution.

“Entities tell us they want to pull these scams down earlier, but they worry about being prosecuted if they accidentally take down a legitimate customer or website,” Simpson says.

“These changes give them more confidence to act when something looks wrong.”

“This is about fast, decisive action to combat scammers. If a bank wants to pause a suspicious payment, or a telco wants to block a fake website link in a text campaign, we want them to be able to do that promptly without looking over their shoulder,” he adds.

The changes will be introduced through amendments to the Fair Trading Act, which will also be given more teeth with increased penalties, up from $600,000 “to the highest of three times the value of the commercial gain, the value of the transactions, or $5 million”, the Government says.

In terms of what providers can do, the Government says domain name registrars and hosting companies can suspend, cancel or redirect domains associated with scam activities. Likewise, web hosting providers can take down or disable access to scam related content - or entire sites as well.

Telcos such as One NZ and Internet service providers (ISPs) can block access to scam websites and domains at the network level. This includes blocking using the domain name system (DNS) or through Internet Protocol (IP) addresses.

New Zealand telco industry lobby group, the Telecommunications Forum (TCF), reacted positively to the announced changes.

“The TCF and members welcome the safe harbour provisions outlined by the Minister. It allows us to work collaboratively with our partner agencies to block scams and fraudulent activity as quickly as possible,” the organisation’s chief executive Paul Brislen says.

“The evidence is that fraudulent websites are most effective in the first 48 hours so if we can act in the first few hours of a scam campaign we can ensure New Zealand users are protected even if they do click on a fraudulent link,” says Brislen.

Across the Tasman, authorities such as the Australian Investment and Securities Commission (ASIC) have powers to not only block websites, but can go after scams on social media as well. ASIC blocks around 130 websites a week.

Meanwhile, digital platforms such as Google and Meta can take action to remove or demote scam-related posts. This includes ads, pages and user accounts, the government said.

The measures announced do contain incentives to encourage digital platforms to quickly take down scammy content, which can be lucrative for them. Reuters recently published an exposé on Meta earning billions of dollars on fraudulent ads, which the news organisation said accounted for up to 10 per cent of its annual revenue.

Banks roll out anti-scam intelligence

Other anti-scam initiatives announced this week include New Zealand banks expanding the Confirmation of Payee (CoP) scheme, under their GetVerified umbrella organisation. CoP is being rolled out in New Zealand, and GetVerified is now seeking to make it available to businesses, fintechs and local and central government outside the banking apps.

This can be done through the VerifyBiz and Verify+ initiatives, the latter which can be implemented at an application programming interface (API) level. GetVerified spokesperson Jo Barribal explains the CoP extensions will be not-for-profit, with only cost recovery for the programme being the goal.

Barribal declined to reveal how much it would cost applicants to take part in the CoP extension programme, saying it was “commercially sensitive”.

Hnry, CentrePort, Health New Zealand/Te Whatu Ora and Givealittle are on the trial with more entities expected to join next year.

Intelligence sharing technology is also being shared in a collaboration with Australia’s Financial Crimes Exchange (FCX), which operates anti-scam solutions and initiatives, and GetVerified.

Through this, banks can freeze accounts that they have confirmed to be controlled by scammers, so as to restrict “money muling”. Doing so increases the chances of recovering money for the victim. Furthermore, customers can be alerted to high-risk account transfers, before money is being sent.

Already big losses grow larger

Meanwhile, bank-owned Payments NZ reports gross scam losses for the last year were around $265 million. This is through NZ bank accounts, and up from roughly $195 million in 2023.

“Those numbers are too high,” Simpson says. 

“We need a prevention first approach, where scams are blocked as early as possible,” he says.

Banks and telcos now have legal cover to act faster, but the $265 million in confirmed losses represents only what authorities can measure.

In fact, Simpson himself suggests that the number could be as high as $2 billion, with Netsafe this week floating it could be around $3 billion. The Global Anti-Scam Alliance (GASA) estimates worldwide losses at NZ$782 billion, which is for online scamming only, not counting ransomware and phishing attacks.

The safe harbour provisions address industry concerns about liability, but they arrive years after scammers established industrial-scale operations in Southeast Asian compounds where hundreds of thousands of trafficked victims are forced to take part in online scams, often with violence.

Against such industrial scale-scamming operations, blocking suspicious domains and freezing mule accounts could prove little more than plugging leaks in a badly fractured dam. This year, a restructuring with staff cutbacks of the Department of Internal Affairs' anti-scam team took place as well, and it isn't clear if any additional resources for active online fraud investigation will be allocated.

Next year’s figures will tell if the new measures have made a difference.