Title: Australia Proposes New Code to Combat Scammers, Holding Companies Accountable
Record Number of Scams Reported in Australia, Costing Billions
Introduction: Australia experienced a surge in scams in 2023, with more than 601,000 incidents reported—an increase of 18.5% from the previous year. The total cost to victims reached a staggering $2.74 billion. To address this growing issue, the Australian government has proposed a new Scam Code Act, which aims to impose stricter standards and penalties on companies that enable scammers to operate.
Proposed Scam Code Act: Strengthening Protections and Imposing Penalties
Under the proposed Scam Code Act, companies found allowing scammers to operate could face penalties of up to $50 million and be required to compensate victims. Minister for Financial Services Stephen Jones emphasized the need for significant uplift in standards and protections to combat the rising scam rates. The Act will mandate companies to adhere to minimum standards for preventing, detecting, and disrupting scams, as well as promptly responding to and reporting such crimes.
Expanding Responsibility to Include Social Media Platforms
Unlike the UK, where banks are solely held responsible, Australia’s proposed laws will encompass platforms like Facebook, Google, and TikTok, which are often used to advertise scams to unsuspecting victims. Minister Jones made it clear that social media platforms must not evade accountability. Platforms that accept money for advertising scam content will face consequences, ensuring that criminals do not have an easy means of disseminating their fraudulent investment materials.
Telecommunication Companies and Social Media Platforms Crackdown
Telecommunication companies will be obligated to crack down on scam messages and phone calls. Minister Jones emphasized that social media platforms must also fulfill their obligations by confirming the identity of advertisers, preventing criminals from easily publishing fake investment materials. The codes of practice will be updated to include these new obligations, ensuring the prevention of scams reaching Australians.
Compensation for Scam Victims
Under the proposed Act, victims of online scams will have the recourse to seek compensation from advertising platforms, telecommunication companies, and both the sending and receiving banks. The Australian Financial Complaints Authority (AFCA) will handle these cases, providing a single door for dispute resolution.
Welcoming the Move: Industry and Consumer Advocacy Groups
The Australian Banking Association (ABA) welcomed the proposed Scam Code Act, acknowledging the progress made in reducing scam losses. However, CEO Anna Bligh stressed the importance of holding all parties in the scams chain accountable to effectively protect the community. Consumer Action Law Centre (CALC), CHOICE, ACCAN, and Super Consumers Australia have also expressed their support for the Act. CALC CEO Stephanie Tonkin emphasized the need for a clear and simple pathway to redress for scam victims, while Super Consumers Australia called for specific protections for people’s superannuation to safeguard their retirement savings.
Assessing Existing Systems and Government Expectations
The Telecommunications Industry Ombudsman stated that the existing dispute resolution system is working adequately. However, Minister Jones believes that the proposed expanded powers will simplify the process of seeking compensation. Tech companies, including Meta, Google, Snap, TikTok, and Yahoo, have attempted to avoid a statutory code by releasing their own Australian Online Scams Code. Nevertheless, the government deems these voluntary rules insufficient, stating that they do not align with community or government expectations.
Conclusion: Taking a Stand Against Scammers
As Australians continue to lose billions to scams, the proposed Scam Code Act demonstrates the government’s commitment to combatting this issue. By holding companies accountable, expanding responsibility to social media platforms, and providing avenues for compensation, Australia aims to protect its citizens from falling victim to scams. The Act, coupled with ongoing consultations, ensures that the country is taking a proactive stance in safeguarding its citizens against scams.
