In an era where digital scams are increasingly sophisticated, scam protection in Australia is evolving as the government takes bold steps to safeguard citizens. New consumer protection laws are set to reshape how businesses handle scam prevention, fraud detection, and victim compensation. Let’s explore what these changes mean for you and the companies you interact with daily.

The Human Cost of Scams

Imagine saving for years to buy your first home, only to lose it all in a moment. This was the devastating reality for a 34-year-old person, a scientist from Sydney. He lost $280,000 to scammers impersonating his lawyer’s firm, tricking him into transferring his life savings.

“This isn’t just one person’s mistake,” the scientist explains. “There are at least two banks, a law firm, and the legislation that allowed this to happen.” His story is just one of many—Australians reported over 601,000 scams in 2023, resulting in losses amounting to $2.74 billion. The message is clear: scam awareness and protection in Australia needs to improve, and the government is taking steps to help address the underlying issues.

What are the new laws?

The Albanese government has announced draft legislation that will revolutionise scam prevention in Australia. This new legislation will establish mandatory codes for banks, telcos, and tech giants, creating stricter obligations in regards to:

  1. Scam prevention
  2. Detecting fraudulent activity
  3. Disrupting ongoing scams
  4. Responding to and reporting crimes

One of the most impactful aspects of the new laws is the introduction of heavy fines. Companies that fail to meet these obligations could face penalties of up to $50 million and will be required to compensate victims. This marks a significant shift from the current system, where victims are often left to bear their losses alone.

What This Means for Different Industries

Banks:

  • Must implement “confirmation of payee” technology.
  • Required to respond swiftly to reported scams.
  • Need to identify and close “money mule” accounts used by scammers.

Tech Giants (Google, Facebook, TikTok, etc.):

  • Can be held responsible for scams that thrive on their platforms.
  • Required to verify advertiser identities and ensure content legality.

Telcos:

  • Must verify sender identities for text messages.
  • Required to block numbers used for scam calls.

These changes are designed to provide more robust protection for citizens and help businesses be held more accountable.

The Compensation Game: A New Approach

Unlike the UK’s model, which places the burden solely on banks, Australia is introducing a unique approach that shares liability across industries. Under the new laws:

  • Victims can seek fraud compensation from multiple parties, including banks, tech platforms, and telcos.
  • Disputes can be escalated to the Australian Financial Complaints Authority (AFCA).
  • AFCA’s maximum payout is currently capped at $1.2 million.

While this approach has its critics, the government believes it offers better protection and fairer responsibility for scam-related losses.

Industry Reactions

There was mixed reactions to the new legislation and the wider implications.

Tech Giants:

  • Initially resisted the mandatory changes.
  • Google claimed that preventing all scam websites in search results isn’t feasible.
  • The Digital Industry Group Inc. (DIGI) has since agreed to collaborate with the government on these reforms.

Banking Industry:

  • Supports the shared liability model.
  • Anna Bligh, CEO of the Australian Banking Association, has stated that this approach is both fair and effective for scam prevention.

Consumer Groups:

  • While generally supportive of the new laws, some express concerns about delays in compensation and dispute resolution.
  • There’s also disappointment that Australia didn’t fully adopt the UK’s model, which some feel offers quicker compensation.

What This Means for You

As a consumer, the new scam protection laws promise several benefits and safeguards:

  1. Better Protection: Companies will be required to take stronger measures to disable and prevent scam operations.
  2. Easier access to Compensation: Victims will have more avenues for seeking fraud compensation and dispute resolution.
  3. Increased Awareness: Companies will invest more in educating their customers about digital scam awareness.

The Road Ahead: Challenges and Opportunities

While the new legislation is a significant step forward, challenges remain. How quickly can companies adapt to the new requirements? Will these laws be flexible enough to counter evolving scam tactics?

Tips for protection yourself

While these new laws will enhance your consumer protections, it’s still crucial to stay vigilant. Here are some tips to help you stay safe:

  1. Verify Independently: Always confirm payment details with a trusted source.
  2. Be Sceptical: If something seems too good or too urgent to be true, it probably is.
  3. Use Secure Payment Methods: opt for methods that offer buyer protection.

Source

ABC News,  Michael Atkin and Mary Lloyd – https://www.abc.net.au/news/2024-09-12/banks-telcos-social-media-fines-scams-code/104346234