Smart money: How to avoid PayID scams
Do you use PayID? Hardly surprising, given that more than 15 million Australians have taken up the electronic payment system since its launch six years ago.
The attraction is simple: it’s easy to use, free, and money is transferred quickly. The unique identifier (the ID part) is linked to your bank account; you only need a mobile number or ABN to send and receive money.
According to the Australian Banking Association, it’s also one of the most important steps customers can take to prevent scams.
But the mobile-friendly service hasn’t been immune to scammers, either. Even the tech-savvy younger generation - least likely to be caught in other financial scams - has been caught out.
With the rising cost of living, more Australians are turning to online marketplaces to sell unwanted goods and raise a bit of extra cash. And this is where PayID scammers are waiting.
What is PayID?
PayID is a payment system launched in 2018 with the aim of simplifying money transfers in Australia. It eliminates the cumbersome process of exchanging Bank State Branch (BSB) and account numbers, replacing them with familiar identifiers such as your mobile number or email address.
PayID offers a convenient and secure alternative to traditional bank transfers. It can be used for a wide range of purposes, including:
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- Paying friends and family - Splitting bills, repaying loans, or sending gifts is now a breeze with PayID. Simply share your PayID, and the money arrives instantly in your friend's account.
- Making online purchases - Many online stores now integrate PayID as a payment option. Skip the hassle of entering long credit card details and complete your purchase in seconds.
- Receiving payments from businesses - Whether a freelancer, a small business owner, or simply selling something online, PayID allows your clients to pay you quickly and easily.
This approach makes sending and receiving money faster, easier, and more secure because you can confirm the recipient's name before authorising the payment.
The PayID system is a brainchild of Australian Payments Plus (AP+), the national domestic payments organisation. It’s a consortium of Australian financial institutions, including BPAY Group, EFTPOS and NPP Australia.
How do I create a PayID account?
Check your bank’s compatibility
The first step is to ensure your bank supports PayID. More than 100 Australian financial institutions do, including the big four banks - ANZ, Commonwealth Bank, NAB and Westpac. You can search for your bank on the PayID website.
Log in to your online or mobile banking
Head to your bank's online banking platform or mobile app and log in as usual using your credentials.
Look for a dedicated "PayID" section or setting within the menus. Some banks might have it under "Payments" or "Account Settings”.
Choose your identifier
Select the identifier you'd like to link to your PayID. Most commonly, you can choose your mobile number or email address. Some banks also allow linking your ABN or organisation identifier for business purposes.
Link and verify
Once you've chosen your preferred PayID identifier (mobile number, email address, etc.), follow the on-screen instructions to link it to your desired bank account. This usually involves entering a verification code sent to your chosen identifier.
Your PayID name will be the same as the name associated with your bank account.
Confirm and activate
Review your PayID details carefully and ensure everything is accurate. Once satisfied, confirm your selection and proceed with the activation process. Your bank might require additional steps, such as setting up a PIN or answering security questions.
Do a quick trial transfer with a friend to verify everything works properly.
How to use PayID?
Sending and receiving money via PayID is pretty straightforward. Here are the steps:
Sending money via PayID
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- Locate the PayID option - Open your online banking platform or mobile banking app. Look for the "PayID" or "Send Money" section.
- Choose PayID - Select the option to send money using PayID. This might be labelled as "Pay to PayID" or "Send with PayID”.
- Enter recipient details - Enter the receiver’s PayID. This can be their mobile number, email address, ABN, or organisation identifier, depending on how they registered it.
- Confirm recipient - The recipient's name will appear on your screen. Double check to ensure it matches the intended recipient.
- Enter the amount and message (optional) - Input the amount you want to send. You can also add a brief message if desired.
- Review and send - Carefully review the transaction details before confirming. Once satisfied, click "Send" or "Pay”.
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Receiving money via PayID
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- Share your PayID - Provide your PayID to anyone who needs to send you money.
- Wait for notification - When someone sends you money through PayID, you'll receive an instant notification – if enabled – on your phone or online banking platform. You should receive it within minutes of the sender sending the money.
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How are scammers using PayID
Scammers are cashing in on Australians’ unfamiliarity with this relatively new payment system. In 2022, users lost more than $200,000 to PayID scams. Here are a few examples:
Impersonation and urgency
Scammers often impersonate someone you know, like a friend, family member, or even a trusted organisation, requesting urgent PayID payments to someone else, claiming their PayID is inactive or has some issues.
They might create a sense of panic or pressure, pushing you to act quickly without verifying the request's legitimacy. They may use an AI voice to sound like someone you know to make them sound more believable. While there’s no reported case in Australia yet, it’s been happening in other parts of the world.
Phishing attacks
Deceptive emails or text messages disguised as official notifications from your bank or a recognised company are another common tactic. These messages might tell you to update your PayID details and contain links leading to fake websites designed to steal your personal information.
Fake invoices and bills
Scammers might send invoices or bills for products or services you never bought. These invoices might appear legitimate, but the recipient's PayID will be linked to the scammer's account. They will also use urgency tactics so you won’t have time to verify the request’s authenticity.
Facebook Marketplace scams
Facebook Marketplace, unfortunately, has been a breeding ground for PayID scams. Usually, there are two types:
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- Overpayment scams - The buyer offers to overpay for your item and asks you to refund the difference via PayID. They might send you a fake payment confirmation screenshot to make it seem legit. The scammer hopes you'll transfer the funds before realising that the proof of transaction is phony.
- Fake buyer scams - The scammer creates a fake profile or hacks someone else’s and pretends to be interested in buying your item. They might claim they can't send payment because your PayID isn't set up as a business profile. Or they may say they have a minimum payment amount and will "overpay" you. They then ask you to send the difference back. Following this, they might send you a genuine-looking email or text message stating you need to pay to update your PayID. Or the email could include a phishing link that will capture your sensitive information.
The latter happened to Peter Gaal, who lost $500 when an "old lady" claimed she had sent him $6000 for his $5500 car. She eventually requested a refund of the "excess" amount, which turned out to be his own money.
How to avoid PayID scams?
While the system is relatively new, there are red flags you must watch out for to avoid falling for PayID scams:
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- PayID is a free service. No cost is associated with sending or receiving money, so any request for fees is a red flag.
- Communication regarding PayID will always come from your bank, not "PayID" itself. Any texts, emails, or calls claiming to be from PayID are likely scams.
- You don’t need to upgrade your account or pay additional fees to receive money through PayID. Any such requests are attempts to steal your information or money.
- A genuine buyer will typically inspect and collect the goods themselves. Anyone offering to send someone else to collect without examining the item is likely a scammer.
- While PayID is convenient, genuine buyers often prefer cash for in-person transactions. Be wary of someone refusing cash entirely.
- Double-check the recipient's name and details before confirming any transaction. A slight mismatch or unfamiliar name should raise red flags.
- Newly created social media profiles can indicate a scammer at work. And don't rely solely on profile pictures or usernames. Verify the identity through other means, like requesting additional information or seeking reviews. Genuine buyers/sellers will be understanding and patient if you need time to confirm their identity or legitimacy.
- Be wary of requests for immediate payments, especially those accompanied by threats or emotional appeals. Legitimate transactions rarely involve pressure tactics.
In addition to the above points, stay up-to-date on the latest tactics scammers use to target users. And be aware of platforms (online selling such as Gumtree and eBay) and seasons (tax time and the holidays) where scammers are most active.
What can I do if I experience PayID fraud?
Falling victim to PayID scams can be stressful, but staying calm and taking immediate action is important. Here's what you can do to minimise the damage and protect yourself:
Contact your bank immediately
Inform your bank about the fraudulent transaction as soon as possible. Provide your bank with as much information as possible, including the date and time of the transaction, the recipient's details (if known), and the amount lost.
Follow your bank's instructions for reporting fraud. Different banks may have specific procedures in place.
Report the scam to authorities
For financial losses, file a report with ReportCyber, the online portal for cybercrime reporting. You can also report to Scamwatch to help authorities track and monitor fraudulent activity, potentially preventing others from falling victim to PayID scams.
If your personal information has been breached, you can ask for help from IDCARE.
Change your PayID and bank account passwords
As a precautionary measure, update your PayID and bank account passwords immediately. Choose strong, unique passwords for each account and avoid using the same password for multiple platforms.
Monitor your bank account and credit report
Keep an eye on your bank account activity for any unauthorised transactions. Consider requesting a copy of your credit report to ensure no fraudulent activity has occurred beyond your bank account.
Be vigilant and proactive
Scammers may try to contact you again with further phishing attempts or similar scams. Remain vigilant and cautious of suspicious communication, particularly those requesting additional information or urgent action.
PayID is a very efficient way of transferring money quickly. You just need to be aware of how scammers take advantage of that fact and think before sending money anywhere. If you have an issue with PayID and aren’t getting the support you need, lodge a complaint with us, and we’ll help you handle it.
