The most recent data from Scamwatch, operated by the Australian Competition & Consumer Commission (ACCC), found that Australians had reported losing more than $200 million in banking and cryptocurrency-related scams this year.
Official estimates found that Australians lost more than $2 billion in scams last year. However, the actual amount may be considerably higher. Some victims are too ashamed and embarrassed to admit to falling victim to fraud. Therefore, they are reluctant to report the crime.
Crypto Scams Statistics
Most money lost to investment scams involved crypto investments, with $113 million reported loss this year in crypto alone. The ACCC also stated that,
“cryptocurrency is the most common payment method for investment scams,” likely because it cannot be reversed once a transaction is made.
The Australian government has further reported that cryptocurrency investment scams are the driving factor behind increasing reports of investment scams nationwide. Officials stated that urgent work is needed to combat the issue. According to this report:
- Losses to cryptocurrency investment scams have increased by 357% since 2020
- Scamwatch received 4,730 cryptocurrency investment scams in 2021
- 49% of all reported investment scams were related to cryptocurrency investments
Consumer groups are responding by urging banks to assume more responsibility for compensating fraud victims and encouraging them to allocate more funding toward fighting fraud.
Make the Banks Pay
According to an Australian Broadcasting Corporation (ABC) report, activist groups are pushing measures that would compel banks to confirm if a recipient’s name matches their account name when money is transferred online.
Advocates from groups like Consumer Action believe that banks should be liable for compensating the victims of scams. Gerard Brody, CEO of Consumer Action, also pointed out in an interview that “The ACCC says in [its] report that banks and the finance sector need to do more to protect their customers from scams” since it will encourage more investment in preventing fraud – and ultimately protecting people.
The ACCC is actively pressuring banks to implement a confirmation of payee (CoP) system after the UK model in the belief that it will reduce fraud by $420 million annually. Although PayID technology is optional, which enables clients to view the name associated with a BSB and account number, banks still want more customers to use it.
It is evident, according to Brody, that a voluntary system is still ineffective in preventing scams. He further encourages the Australian authorities to follow the approach taken in the United Kingdom. The UK has passed rules requiring the constrained refund of payments and frauds, and the regulator can compel banks to compensate consumers.
Watchdog Warns of Crypto Risks
Sean Hughes, the Australian Securities and Assets Commission (ASIC), reportedly advised investors to understand that buying digital assets involves “severe risk-taking.” He further stated, “We want to be very plain and unequivocal in our cautions to consumers entering the market.” We believe that cryptocurrencies are incredibly volatile, risky, and complex. Due to the observed increase in cryptocurrency frauds and hacks, the Australian authorities are paying greater attention to the cryptocurrency industry.
Scam Prevention Tactics
Rising concerns over crypto scams led the Australian Federal Police to establish a dedicated unit for tracking crypto-related activities. Binance Australia also disclosed in August that it is enhancing KYC requirements in the onboarding process for new customers. The Australian government has also agreed in principle to recommendations by the Senate Select Committee on Australia as a financial and Technology Centre for safeguarding consumers.
Increasing fraudulent activity related to cryptocurrencies is also a sign that more and more people are using crypto. The fact that more than half of crypto investors started their journey in 2021 has been widely reported. Government attention is not only necessary to protect consumers, but it is also a signal for continued growth in the industry. Greater consumer protections will ultimately allow more individuals to confidently enter the crypto market and continue using cryptocurrencies for transactions without fear of being scammed.