Why can't we do more to stop rip-off sites?
Our banking system and financial regulators seem to face a full-blown security crisis.
Websites run by criminals advertising fake bank deposits, are being left to operate for months after their crimes are discovered. They’re extracting life-ruining amounts of money from New Zealanders, but our agencies are failing to shut them down.
Victims themselves have been hunting and reporting websites, but their efforts to protect others are ignored.
Carla O’Neil, head of The Initiative victim group said: “I begged the Financial Markets Authority, Netsafe, CERT NZ and Google to take down the sites we were caught on and it was a giant waste of time. They just blew me off. I look regularly for new ones and alert them, but I get ignored. It’s incredibly frustrating.”
One person who lost $400,000 spent six months trying to get the FMA, RBNZ, Netsafe and CERT to shut or block the criminal website. This site went on to destroy the lives of others, while agencies failed to stop it and didn’t communicate the holdup.
There are warnings of scams on the FMA’s website but action in closing them down is difficult to pin on anyone, when they all operate as a silo.
Last weekend I lost my patience. I woke to an email from another investor, ripped off by criminals with slick documentation. Their $250,000 loss was closely followed by another $300,000 from an equally distraught victim. They both came forward immediately after the Banking Association announced the need for name and account numbers to match in the payment system.
This is the flaw which criminals currently target.
With a sinking feeling I checked the FMA’s scam pages and saw “kiwitermdeposits.com” was the latest iteration. And sadly, I knew it would still be running and plying its trade.
When I expressed my frustration directly to the FMA, the official response was, in my opinion, worse than weak.
It’s not its “remit” and it “has no power” is the official line.
Seriously? You don’t need a remit to hunt down the agency who does have the power. Then hound them. You are a consumer protection agency and I think you should behave like one.
A warning on the FMA’s website comes with the expectation of follow-through and collaboration. It’s not a turf war. Sitting and watching the harm continue is indefensible.
Who has oversight for blocking criminal websites? The FMA? Reserve Bank? Netsafe? Cert? DIA? Blink and you’re it.
That’s alphabet soup for consumers and no wonder fraud warnings are barely seen. No one thinks to place them at the entrance to online banking and mobile apps with every bank carrying a mirror-image “fraud centre”.
While the FMA certainly tries to communicate, it ist not an everyday brand.
While we wait for completion of a fraud hub, executive trips to Singapore and a consultation process, life savings will be lost. The Heads of Council meeting between the RBNZ, Treasury, FMA, MBIE and the Commerce Commission will add it as an agenda item, but harm continues.
The hub and meetings must take place, but in the interim an emergency band-aid solution will do fine.
What I’m suggesting is for the FMA to communicate fraudulent schemes to “somewhere” and that “somewhere” shuts them down pronto.
Do this one simple thing now and patch the immediate problem. Only two agencies need to agree to speak and follow through. The FMA need a “shut-down” alert on their site, along with “still operating” and transparent updates. Ask every bank to do the same.
Offshore internet addresses are difficult, but tell me this; how do so many governments around the world manage to successfully content-block? When life-savings are being wiped out, this is more than an agenda item, it’s an emergency.
No agency appears to have sophisticated software scanning for the misuse of financial brands. Maybe it’s time the FMA did. Banks should be doing this themselves, but failed in spectacular fashion. ANZ, ASB, BNZ, Westpac and Kiwibank logos appeared on the criminal website “ratesfinder.co.nz”.
No one can criticise victims when our financial advisory market operates using the same methods as criminals. I’ve pointed this out to the FMA. How do you detect a scam when real advisers have similar websites asking for your name and contact details to get best-buy deposit information?
To be fair, this is a case of reverse engineering. Advisers have always provided term deposit best-buy tables, so they can attract clients with too much money invested in cash. It’s an age-old technique and hugely unfortunate it’s being mimicked.
Trusted comparison sites like moneyhub.co.nz and depositrates.co.nz will give direct links to the webpage of a genuine bank.
Criminals’ imaginations are not limited to term deposits and it’s a small leap to guess the advice market, fund managers and stock brokers are the next big target.
Criminals actively target flaws in our out-dated payment system and regulators leave the door to the loot wide open. From beginning to end, the victims of investment crime are let down. And that erodes trust in our industry.
Full FMA comment: “When drafting a public warning we refer matters directly to the relevant agency, depending on the characteristics of the case.
“In this case we have referred the website to Cert NZ. The complainant has referred it to Netsafe. We understand our public warnings do help Cert NZ make a case with domain providers to request that overseas-based websites like this can be blocked in New Zealand. However because these are international domains, there is no jurisdiction in NZ, and the FMA itself, as conduct regulator for financial services in NZ, has no powers in this area.
“We continued to build on our awareness campaigns for scams as part of the recent Money Month, and to issue warnings to alert consumers to possible scams. Along with fellow agencies in the financial sector we are looking at ways to achieve greater coordination and cooperation around tackling scams, and this is on the agenda for the Heads of the Council of Financial Regulators (the chief executives of the Reserve Bank, the Treasury, MBIE, the Commerce Commission, and the FMA) at their next meeting. We are also talking with industry groups on the same theme to encourage more coordination in the private sector with Government agencies.”
Janine Starks is the author of www.moneytips.nz and can be contacted at moneytips.nz@gmail.com. Readers should always seek specific independent financial advice appropriate to their own circumstances.