Banks and social media companies are set to receive fines of up to $50m and could be forced to pay compensation if they do not protect customers from scams, under a crackdown proposed by the federal government.
Telecommunication companies will also be affected by the measures, after the government ignored calls to follow a similar path to the UK, where banks are solely responsible for protecting customers.
Australians have lost at least $159m to 164,11 scams so far this year, according to Scam Watch. The total amount lost was likely much larger, as not everyone scam victim makes a report to the organisation.
The assistant treasurer, Stephen Jones, said the government would introduce large fines for companies if “they have done the wrong thing”.
“The new laws that I’ve published today … [introduces] tough new 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,” he told the ABC on Friday.
“And if they don’t meet those obligations, then, yes, compensation will flow, 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.”
Under the measures, which Jones said would be out for consultation for three weeks, scam victims can seek compensation from a telco, digital platform or a bank by taking their case to the Australian Financial Complaints Authority (Afca).
However, consumers can already raise a case with Afca and it is unclear how the expanded powers will make it easier to seek compensation.
As part of the reforms, banks will have to report a scam to authorities as soon as they learn of it, and attempt to stop the payment going through.
They will also have to identify and shut down money mule accounts, which receive and shift scam victim’s money, usually offshore.
Digital platforms like Facebook, YouTube and Google will have to verify the identity of advertisers and ensure their content is legal. Phone providers will also have to verify who is sending text messages and block numbers making scam calls.
The Consumer Action Law Centre (CALC), CHOICE and the Australian Communications Consumer Action Network all welcomed the policy.
The CALC’s chief executive, Stephanie Tonkin, also called for the government to set up a reimbursement model similar to that used in the UK, which would remove some of the barriers for their customers.
“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,” she said.
“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 welcome the release of draft legislation. The Australian Banking Association’s chief executive, Anna Bligh, said winning the war against scammers would only be possible through a collective effort, including from government, banks, telcos and social media companies.
“Banks have advocated for these industry codes because only an entire scams chain approach with a major focus on prevention will enable us to beat scammers,” Bligh said.
“These codes must address the core problem of people being exposed to scams in the first place. That means ensuring telcos and the social media platforms have strong protections in place to stop scams reaching Australians.”