How we’re responding to online scams wreaking havoc on younger Aussies

Penned by ubank Head of Fraud, Jacob Donohue

You could be forgiven for thinking young people are scam proof. After all, they’ve grown up online. Yet a recent survey by Deloitte found that Gen Z are more than three times as likely to fall prey to online scams compared to older generations^[i].

The financial impact is staggering, with younger Australians losing approximately $61.7 million to scams last year alone, according to the ACCC’s Scamwatch^[ii].

Working at a digital bank in the Fraud team, I am aware of the profound impact scams have on the lives of young adults. From dream holidays that never happen to losing a first-home deposit and starting anew, these devastating events need to stop.

Our bank caters predominantly to a generation of Aussies who prefer to do their banking in the palm of their hands rather than over a counter. Most of our customers are aged 18-35, and research indicates that over half of these digitally-savvy folk spend at least four hours per day on social media^[iii]. This high level of engagement with online platforms unfortunately makes young people prime targets for criminals. When fraudulent ads for too-good-to-be-true investments appear on Facebook, Instagram, or TikTok, this demographic is more likely to encounter them.

Research commissioned by ubank reveals that 27 per cent of Gen Z and Millennials have reported being scammed. Of those, almost half fell victim to online and marketplace shopping scams (46 per cent), followed by investment scams (21 per cent) and phishing scams (20 per cent). These statistics paint a grim picture of the vulnerability of the digital generation to scams.

The frequency of scam exposure is equally concerning. In a typical week, two-thirds (66 per cent) of respondents reported encountering a scam attempt at least once. More than one in four (27 percent) faced these threats far more frequently, at least once a day^[iv].

We are acutely aware of the role digital banks like us play. We have a scams strategy in place, and we have a dedicated team of fraud, scams, and intelligence experts working tirelessly to tackle this issue. We’re also part of NAB, and the Group continues to invest in detection, prevention and education to keep customers safe and secure.

Scams almost never start in a banking channel. The most common paths for scams among those who are exposed are text messages (68 per cent), email (57 per cent), phone calls (56 per cent), and social media (34 per cent). When a customer sends money to a scammer the money leaves the bank and the bank’s options to retrieve the money are very limited.

We need a collaborative, industry-wide approach so that young Aussies stop receiving dodgy SMSs and investment ads on social media channels aren’t distributed in the first place. When these lures are removed, the crime is stopped before it starts and scammers fail.

That’s why we support the Australian Government’s action on this. It plans to apply new Scam Codes across telecommunications, social and digital media companies, and banks alike.

Meanwhile, we will continue to implement robust measures. Recently, we introduced innovative technologies such as passkeys for secure banking app access and to help prevent impersonation and account takeover scams. Our partnership with BioCatch is enhancing our ability to detect fraudulent activities, including money mule schemes, proactively safeguarding our customers’ finances.

Additional actions we’ve taken include removing links in unexpected text messages, working with telcos to make it harder for criminals to spoof or impersonate bank phone numbers and infiltrate legit text message threads, and bolstering our contact centre with dedicated fraud support. We’ve enhanced security features like payment holds on high-risk transactions, placed warnings on new payees to mitigate risks, and have blocked payments to some high-risk cryptocurrency platforms.

Through initiatives like our ‘Scam School’ series on TikTok and Instagram, we proactively engage and inform our community, reaching millions of our viewers and followers with critical insights on scam prevention.

Collaboration is key. Protecting the financial security of young Australians requires both proactive measures and collective action. By empowering consumers with knowledge on the channels they actively use, implementing stringent security protocols using innovative technology they can easily adapt to and advocating for industry-wide cooperation, we can mitigate the devastating impact of online scams.

Together, we can ensure that every Australian can go about their online activities, including banking, with confidence.

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