One of the most important bills to come before the Federal Parliament prior to the looming election will be a proposed framework for preventing scams.
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Ahead of the parliamentary debate there seems a lot of discussion about ensuring there are adequate protections - but for who?
The peak body for the telecommunications industry, The Communications Alliance, is wanting a "safe harbour". But not for consumers, instead it is for the major telcos.
They are complaining that the sector is facing "quadruple jeopardy" - at the hands of the sector regular (ACMA), the ACCC, the Australian Financial Complaints Authority and then the liability of civil action.
The argument is that if the telcos simply comply with an industry code (one they have largely written themselves) then they should be protected in their "safe harbour".
The argument seems to totally forget how much everyday Australians are losing to scams and just how weak our protections are when compared to other countries.
Australians lost almost $3 billion to scams between in 2024 and reported more than 230,000 scams, according to the National Anti-Scam Centre.
An April 2024 report by the centre stated phone call scams resulted in the highest reported losses ($116 million) in 2023, followed by social media ($93 million) and email ($80 million).
The simple fact is that instead of changing the draft framework to provide greater protections to big corporations we need to strengthen it to help protect consumers.
What lets the scams prevention legislation down is that consumers must pursue reimbursement through arcane appeal systems, rather than having the presumption of reimbursement from the outset, as will be the case in the UK.
In effect, the legislation places the onus to act on consumers, who have in many instances lost their life savings, rather than incentives on industry to do everything possible to stop scammers in their tracks.
Consumers who have had their life savings stolen are in no position to pursue a claim against a major financial institution due to their failure to protect their savings.
Banks in the UK have been voluntarily reimbursing scam victims at an average rate of 67 per cent since 2019.
New mandatory reimbursement laws came into effect in October 2024 which increased this to 100 per cent.
By contrast, Australian banks only reimburse between 2 and 5 per cent of consumer losses, according to the Consumer Action Law Centre. This vanishingly small amount is grossly inadequate.
These scams are not occurring due to negligence on the part of Australians. Individuals alone cannot be the final bulwark against the schemes of criminal enterprises.
There are three areas where the draft anti-scams framework needs strengthening if it is to do its job and protect ... consumers.
The first is the presumption of reimbursement for consumers with exceptions for cases of gross negligence. This will incentivise effective prevention by financial institutions, telecommunications providers, and digital platforms.
This approach simply aligns with established economic theory, which supports allocating risks and costs to parties best positioned to mitigate harm, thereby reducing overall social costs.
The second area to bolster the framework is not to increase penalties for senior officers who act falsely or recklessly.
The draft code would impose civil penalties on such officers.
But it should go further and include legal penalties such as imprisonment.
This simply reflects standard practice where an individual is providing a statutory declaration.
And finally, the draft should also clarify and strengthen the reasonableness definition for major corporations. It should certainly go beyond simply the adherence to an industry code.
The rapidly evolving scam environment means that tying the substantive obligations on firms to a code will fail to stop the scams.
In our experience, codes can rapidly become obsolete and may take years to be updated, even in circumstances where issues or deficiencies have been repeatedly identified by relevant stakeholders.
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Too many ordinary Australians are falling prey to domestic and international criminals who use increasingly clever deceptions to steal life savings, home deposits and superannuation balances.
Vulnerable Australians, including those in non-English speaking communities and First Nations people are being cruelly targeted.
These days, taking commonsense precautions and "having your wits about you" is not always enough.
I would encourage politicians to put consumers first and give real strength to this legislation including provisions for the presumption of reimbursement.
A mandatory reimbursement scheme has been implemented in the UK. Australia needs to act with similar resolve if we want to dispel our place as one of the most scammed countries in the world.
- Carol Bennett is the chief executive of the Australian Communications Consumer Action Network.
