Need to know
- Businesses will be required to meet new benchmarks to combat scams after the federal government's Scam Prevention Framework passed Parliament
- Banks, telcos and social media platforms will be the first to have to conform to the new rules, or risk fines of up to $50 million
- Consumer advocates welcome the requirements, but say more safeguards are needed
Australians could soon be receiving fewer suspicious text messages and encountering fewer scam ads on social media after new anti-scam legislation passed Parliament this week.
The passage of laws establishing the Scams Prevention Framework (SPF) means banks, telcos and social media platforms will have to meet new obligations to protect Australians from scams, or risk fines of up to $50 million.
"Until now, scam victims have frequently been left to carry the burden of scams," says CHOICE CEO Ashley de Silva, welcoming the changes.
"These requirements will help to shift [that] burden onto the shoulders of big businesses with the technology and resources to stop scams happening."
New laws come after rise in scam losses
The amounts Australians were losing to scammers every year rose dramatically between 2020 and 2022, peaking at a record $3.1 billion, according to the ACCC's Scamwatch.
Although losses reported to Scamwatch have since declined, the government says individual consumers have had to combat scams on their own for "far too long". The framework is the latest in a series of anti-scam initiatives to be announced.
The government says its anti-scam framework will force businesses to "step up" their efforts to fight scams and protect Australians from online criminals.
The government says individual consumers have had to combat scams on their own for 'far too long'
The SPF empowers authorities to put mandatory obligations on certain sectors of the economy and the businesses therein to prevent, detect, disrupt and report scams.
The government says banks, telecommunications providers and social media companies will be the first sectors designated to comply, having previously described these industries as "significant vectors" for scam activity.
The SPF legislation allows the government to apply the same mandatory standards to other sectors in future.
CHOICE says such expansion of protections will be needed, nominating online marketplaces, superannuation firms and crypto exchanges for consideration.
Businesses will have to fight scams or face fines
The SPF will establish baseline requirement all designated businesses must implement in order to combat scams.
The government says it will then develop more specific sector-targeted codes for banks, telcos and digital platforms later this year. These will require companies to take "reasonable steps" to prevent, detect, disrupt and report scams.
Prevention involves stopping scams from reaching consumers in the first place by, for example, blocking phishing messages and ads for fake investment schemes, or proactively warning customers of recent scam trends.
Businesses that don't meet their obligations under the SPF will face fines of up to $50 million
Reasonable attempts at detection, meanwhile, could involve implementing measures such as algorithms to alert staff of suspicious activity.
Actions such as suspending dubious social media accounts or adding friction to high-risk bank transfers could be considered reasonable attempts at scam disruption.
Finally, designated businesses will be required to report scams to authorities and share intelligence with the ACCC's National Anti-Scam Centre.
Businesses that don't meet their obligations under the SPF will face fines of up to $50 million.
New pathways for compensation
Individual consumers have borne much of the financial toll stemming from the rise in scams targeting Australians.
A 2023 study by the Australian Securities and Investments Commission (ASIC) found cases where major banks compensated or reimbursed scam victims were rare – customers themselves covered 96% of scam losses in the 2021–2022 financial year.
The federal government acknowledges there have been few avenues for scam victims to seek compensation, but says its framework will provide "clear and accessible" ways to do this.
The initiative promises to help consumers seek compensation in cases where an SPF-designated business hasn't met its obligations and the consumer has suffered a loss as a result.
If consumers feel a company hasn't satisfactorily resolved their complaint, they will have access to an external dispute resolution body
Designated companies will be required to have an "accessible and transparent" internal dispute resolution scheme where customers can raise concerns about the business's scam prevention efforts.
If consumers feel a company hasn't satisfactorily resolved their complaint, they will have access to an external dispute resolution body.
The Australian Financial Complaints Authority (AFCA) is expected to be the external organisation responsible for resolving disputes related to banks, telcos and social media platforms.
Under the SPF, it will be able to consider the actions of each business connected to a scam complaint, and award compensation to the victims, taking into consideration each business's proportionate responsibility for the loss.
CHOICE calls for more work to be done
CHOICE says while the SPF will "significantly improve" protections for consumers, the government should ensure they're implemented effectively.
"We must make sure consumers can enforce their rights and access compensation through a complaints process that is fair, straightforward and fast," says de Silva.
"The obligations set by the [sector-targeted] codes must also be strong and set a high standard for businesses, so consumers are protected regardless of which bank, telco or social media platform they use."
We're on your side
For more than 60 years, we've been making a difference for Australian consumers. In that time, we've never taken ads or sponsorship.
Instead we're funded by members who value expert reviews and independent product testing.
With no self-interest behind our advice, you don't just buy smarter, you get the answers that you need.
You know without hesitation what's safe for you and your family.
And you'll never be alone when something goes wrong or a business treats you unfairly.
Learn more about CHOICE membership today
Stock images: Getty, unless otherwise stated.
