Unauthorised electronic transaction complaints rocket

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Unauthorised electronic transaction complaints rocket

By John Collett

Complaints involving unauthorised financial transactions and scams are rising fast, as use of online services during the pandemic increases and fraudsters become more active.

Electronic banking grievances made to the Australian Financial Complaints Authority (AFCA) increased by 76 per cent during the year ended June 30, compared with the same period a year earlier. More than a quarter of the complaints concerned unauthorised transactions.

Although the overall number of complaints lodged with the Australian Financial Complaints Authority is down, there has been a big spike in complaints concerning unauthorised transactions

Although the overall number of complaints lodged with the Australian Financial Complaints Authority is down, there has been a big spike in complaints concerning unauthorised transactions Credit:Fairfax Media

“It’s not only the volume of complaints about scams that’s increasing, but also the sums involved. Some complaints involved losses of over $1 million through multiple transactions,” AFCA says in its latest Annual Review.

AFCA’s figures correspond with those of the Australian Competition and Consumer Commission (ACCC), which has also been reporting higher losses to scams during COVID-19.

The ACCC last month said a record $211 million in losses had been reported to it since the start of the year to September 19, already surpassing the losses of $176 million for all of 2020.

The average loss was about $11,000, compared to $7000 for the same period a year earlier.

The most common scams relate to investments, romance and payment redirection, also known as invoice hacking or business email compromise.

AFCA can only consider complaints about the conduct of financial services firms that are its members. In most cases, it is unable to consider complaints about the conduct of scammers and is restricted to disputes about unauthorised transactions.

Overall, complaints to AFCA were down by 12 per cent for the year ended June 30, compared to the previous 12 months. There was a spike in 2019-20 in areas such as travel insurance and superannuation.

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However, travel insurance complaints plunged 22 per cent last financial year as Australians stayed at home because of COVID-19 restrictions.

Superannuation complaints also dropped 31 per cent after the federal government allowed the early release of retirement savings because of financial hardship at the start of coronavirus pandemic.

Still, complaints about super, comprehensive car insurance, investments and financial advice remain significant.

Grievances against the big-four banks fell 7 per cent, which AFCA attributes to better practices in the financial services industry following the Banking Royal Commission.

The number of financial difficulty complaints for the year ended June 30 slumped almost 40 per cent, compared to the previous financial year. AFCA says that is likely due to COVID-19 loan repayment deferrals and government assistance for individuals and small businesses.

AFCA is a one-stop-shop for consumers and small businesses who have disputes with their financial service firms. Complaints cover such things as banking, credit, insurance, advice, investments and super.

It is free to lodge a complaint, however, consumers should first try to resolve the problem with the financial services provider.

Small businesses that can lodge complaints with AFCA are those with fewer than 100 employees. They accounted for 5 per cent of all complaints lodged in 2020-21.

Complaints hotspots

  • Credit cards: 9903
  • Home loans: 6400
  • Transaction accounts: 5758
  • Personal loans: 5343

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