Confirmation of Payee: Can New Banking Tech Really Stop Payment Redirection Scams?

• payment redirection scams
• Confirmation of Payee
• consumer protection

Australia’s new Confirmation of Payee system aims to curb payment redirection scams like the one that cost Louis May his $109,000 deposit. But is it enough to protect consumers—and who’s liable if you’re scammed?

The Human Cost of Payment Redirection Scams

In July last year, 24-year-old Louis May lost his entire $109,000 first home deposit in a sophisticated payment redirection scam. After receiving what looked like a legitimate email from his conveyancer—including a fake PEXA form—Louis transferred funds to a scammer’s account. Only when the bank contacted him for settlement funds did he discover the fraud. Despite immediately reporting the scam to the bank, the money was gone for good.

His experience is, unfortunately, far from unique. Australians lost over $152 million to similar scams last year, highlighting a fundamental flaw in how bank transfers have historically worked—no system to confirm that an account name matches the details entered for payment.

Enter Confirmation of Payee: What Is It?

To combat scams like the one that targeted Louis, Australian banks are now rolling out a new technology called Confirmation of Payee (CoP). When you make a first-time payment using a BSB and account number, CoP checks if the account name matches the bank’s records. If the name and details align, the name is displayed for confirmation. If they’re close, you’ll see the account name to verify. If there’s no match, you’ll get a warning and must decide whether to proceed.

This aims to address the gap that allowed redirection scams—where fraudsters trick victims into sending money to a bogus account—by making it harder to misdirect payments without being detected.

How Will Confirmation of Payee Change Things?

• Reduces scam risk: By confirming payee names, customers are warned before sending money to an account that doesn’t match.
• Supports safer property settlements: Buyers like Louis May are less likely to lose life-changing sums to fraudulent account details.
• National rollout: Major and mid-tier banks are implementing CoP from July, with all deposit-taking institutions following by year’s end.
• Consumer education: Banks are launching the "Check the name. Spot the scam" campaign to help customers adapt.

Is It Enough? Questions About Liability and Protection

Consumer advocates say CoP is a step forward, but not a cure-all. Critically, the onus remains on customers to make the final decision—even after a mismatch warning. Unlike the UK, where banks must reimburse most scam losses (unless gross negligence is proven), in Australia, banks are required to compensate only if they failed to meet their own responsibility standards. This means many scam victims still wear the financial loss, as in Louis’s case.

AFCA (Australian Financial Complaints Authority) reviews show banks are rarely found liable if adequate warnings are given, leaving most scam victims uncompensated. Australian banks typically reimburse just 2-7% of scam losses, compared to 86% in the UK under its split-liability model.

Other Anti-Scam Measures Rolling Out

• Biometric verification for new accounts (facial, fingerprint, or behavioural checks)
• Intelligence sharing between banks to catch "money mules" and block fraudulent transactions
• Delays and extra warnings for payments to new or high-risk recipients

These measures, alongside CoP, form part of the Scam-Safe Accord—a sector-wide strategy to tackle rising scam threats. Despite these efforts, losses remain high, and experts warn that tech alone won’t eliminate scams. Greater liability for banks and tougher cross-sector action (including on telcos and social platforms) may be needed.

What to Do If You’re Targeted by a Payment Redirection Scam

• Double-check payment details verbally with your payee before transferring large amounts.
• Be wary of last-minute changes to payment instructions via email—especially for property settlements or business invoices.
• Look for mismatch warnings in your banking app and don’t ignore them—confirm with your payee directly.
• Report scams to your bank and the police immediately. Speed is critical for fund recovery.
• If you’re a victim, consider making a complaint to AFCA if you believe your bank failed in its duties.

Lasting Impact on Victims

For Louis May, the impact of the scam has been both financial and emotional, forcing him to work overtime and delay moving into his new apartment. His story is a powerful reminder to double-check every payment and treat warnings seriously—even when under pressure. While the rollout of Confirmation of Payee is progress, customer vigilance and strong advocacy remain essential for a truly scam-safe future in Australia.