Need to know
- The government has announced new proposed laws that would hold banks and other businesses accountable for failing to protect their customers from scams
- Social media platforms and banks will be required to report scams as soon as they're aware of them or face steep fines
- CHOICE says consumers should be able to get their money back when businesses fail to protect them from scams
It's been a long time coming – and it's too late for the thousands of victims who've lost billions of dollars – but it's nonetheless a mark of progress.
Assistant treasurer Stephen Jones has announced new proposed laws that would hold banks and other businesses accountable for failing to protect their customers from scams.
The Scams Prevention Framework would empower the Australian Competition and Consumer Commission (ACCC) to impose fines of up to $50 million on banks that systematically fail in their duty to prevent scams. And the culpability will be shared with social media platforms that host them, such as Facebook.
A CHOICE investigation published last year found multiple ads on Google, Facebook and Instagram that had all the hallmarks of promoting scam shopping websites
It's a different model than the UK's anti-scam reforms, which put the onus on banks to compensate scam victims. The shared blame model is in keeping with the way scammers operate in Australia and beyond.
As we reported earlier this year, criminals lurking on popular social media platforms stole $95 million from Australians in 2023, up 249% since 2020. And 76% of those losses happened because victims clicked on a scam ad on a Meta-owned platform.
And a CHOICE investigation published in September last year found multiple ads on Google, Facebook and Instagram that had all the hallmarks of promoting scam shopping websites.
The new laws would require tech platforms to verify their advertisers, a degree of due diligence that's been largely absent.
Systemic failure will be punished
The new anti-scam laws will require social media platforms and banks to report scams as soon as they're aware of them and mandate fines for systematic failures to prevent them, a significant shift from the impunity that such businesses have long enjoyed.
Crucially, the new laws would also hold telcos accountable, a logical move given the unending run of text scams that have affected so many in recent years. Telcos would be required to delete phone numbers linked to scammers and social media platforms would be required to prevent scammers from setting up shop and luring in victims.
Banks will have to alert customers before they approve a transaction to an account linked to a scammer. Had it existed previously, this rule alone would have saved Australians many billions of dollars.
Telocs would be required to delete phone numbers linked to scammers and social media platforms would be required to prevent scammers from setting up shop and luring in victims
The government will establish new anti-scam codes for banks, tech platforms and telcos, and each sector will be required to be aligned with an external dispute resolution service operated by the Australian Financial Complaints Authority. The new body will focus exclusively on complaints from scam victims.
In all, the new laws would impose obligations on the designated sectors to prevent, detect, report, disrupt and respond to scams, the government says.
"Australians are losing too much money to scams and while we've bucked the international trend where scams are doubling every year, losses are still far too much," says Jones. "The way to address that is to put strong obligations on the key businesses within the scam's ecosystem."
Consumer groups welcome the draft bill
The Consumer Action Law Centre (Consumer Action), CHOICE, the Australian Communications Consumer Action Network and Super Consumers Australia issued a joint release welcoming the announcement of the consultation phase.
"For too long, the businesses enabling scammers to conduct their criminal activities have faced no consequences, leaving consumers to carry the burden of scams," says CHOICE director of campaigns Rosie Thomas, adding that consumers "should be able to get their money back when businesses fail to protect them from scams".
For too long, the businesses enabling scammers to conduct their criminal activities have faced no consequences, leaving consumers to carry the burden of scams
CHOICE director of campaigns Rosie Thomas
"Strong scam codes with hefty penalties and rights to compensation should give everyone more confidence that banks, telcos and social media platforms are financially motivated to take scam prevention seriously," Thomas says.
"Our focus during the consultation will be on making sure these reforms work effectively to protect Australians from scammers," says Consumer Action CEO Stephanie Tonkin.
"We 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."
The Scams Prevention Framework is open for public consultation until 4 October this year. A final bill is expected to be introduced in Parliament later this year.
Stock images: Getty, unless otherwise stated.
