NZ Banks to Compensate Scam Victims up to $500,000

Victims in New Zealand lose hundreds of millions of dollars to scams every year. A series of new measures is going to be implemented following the local government's call for stronger consumer protection measures and regulations.

Measures that have been implemented include a payee confirmation service, which allows customers to check the payee's name and account number to confirm correct information. Users also receive warning alerts before making transactions such as high-risk investments.

In addition, new technology can help identify risky and unusual transaction activity based on a customer's transaction history, and can also block or delay payments.

Information on fraudster or money mules will also be shared between banks to help deter criminal activity and freeze accounts if necessary.

Most importantly, if a bank fails to fulfill the above measures, victims who meet the criteria for compensation are eligible for up to $500,000 in compensation. However, payments involving international transfers, third-party payment services or social media purchases will not be covered. The compensation will also depend on whether they exercised “reasonable care” when making the payment.

The New Zealand Banking Association said the new rules have been written into the Code of Banking Practice and will come into force on November 30. The association's chief executive Roger Beaumont believes scam prevention are the best way to protect consumers from fraudulent losses, and the new measures are an important step in the fight against online scam.

“Banks already do a lot to identify and help prevent scams, and these new measures will enhance tech solutions to help protect customers from increasingly sophisticated scams.”