In a move that might just make corporate giants rethink their lax attitudes towards fraud, the federal government is cracking down hard.
Banks and social media titans are now staring down the barrel of a hefty $50 million fine if they fail to shield customers from scams, and that’s not all.
They’ll also be on the hook for compensation payments, as the government rolls out its newest proposal aimed at combating the scourge of fraud.
Telecom companies are also in the crosshairs, defying the UK’s more lenient approach where banks shoulder the entire burden of scam prevention.
Scam Watch’s latest figures are nothing short of alarming: Australians have already been fleeced of at least $159 million to the tune of 164,000 scams this year alone. And that’s just the tip of the iceberg—many victims never report their losses.
Federal Assistant Treasurer Stephen Jones made it clear on Friday: if companies are caught slacking off, they’ll face not just fines but also significant compensation claims. It’s a tough new stance aimed at making sure businesses get serious about protecting their customers from fraud.
According to Jones the new laws introduce tough obligations on banks, on telecommunications companies, on social media companies to prevent, to detect, to disrupt and to report and to respond to scam content within their businesses.
“If they don’t meet those obligations compensation will flow, and not just from the banks. If the telcos have done the wrong thing, they’ll be in the gun. If the social media platforms have done the wrong thing, then they’re in the frame as well.” says Jones.
Under the government’s latest proposals, scam victims could soon be able to chase compensation from banks, telcos, and digital platforms by taking their grievances to the Australian Financial Complaints Authority (AFCA).
Federal Assistant Treasurer Stephen Jones announced that these measures are up for a three-week consultation period, promising a new way for Australians to claw back their stolen money.
The reforms stipulate that banks must now report scams to authorities immediately upon discovery and try to block any transactions in progress.
They’re also tasked with identifying and shutting down money mule accounts—those shady operations that receive and shuffle scam victims’ cash, often vanishing it offshore.
But the scope of this crackdown doesn’t stop there. Digital platforms like Facebook, YouTube, and Google will need to step up their game by verifying advertisers’ identities and ensuring their content complies with the law.
Phone providers aren’t off the hook either; they’ll need to verify the origins of text messages and block scam-related calls.
Consumer advocacy groups are giving a nod to these proposed changes. The Consumer Action Law Centre (CALC), CHOICE, and the Australian Communications Consumer Action Network (ACCAN) have all welcomed the move.
CALC’s chief executive, Stephanie Tonkin, has even pushed for a reimbursement model akin to the UK’s, which could potentially smooth out some of the hurdles for scam victims seeking redress.
Tonkin says CALC’s are continuing to call for a simple reimbursement model that is consumer-centric and incentivises the banks to substantially increase their investment in frontline prevention measures, which they can do as they have the resources.
“A reimbursement model will be a win-win for all because it will provide the certainty and clarity everyone -including the banks- have been calling for.”
Banks are giving a thumbs up to the draft legislation aimed at tightening the screws on scammers. Anna Bligh, Chief Executive of the Australian Banking Association, is all for it, stating that defeating the scammer menace will require a united front.
According to Bligh, it’s not just about banks doing their part; the battle against fraud demands a collective effort involving government bodies, telecommunications companies, and social media platforms.
In Bligh’s view, collaboration across these sectors is crucial to outsmarting the scammers and securing the financial safety of Australians. The draft legislation might just be the rallying cry needed to unite these disparate forces in the fight against fraud.
Just weeks ago, ANZ and NAB executives appeared before a Senate inquiry to address the growing scourge of scams. NAB’s Ross McEwan famously declared that combating this issue demands a “big Australia moment,” emphasising that banks alone cannot shoulder the responsibility.
Australian Competition and Consumer Commission (ACCC) has announced it will now allow banks to collaborate on developing an industry standard for tackling the problem.
