Telco breaches new anti-SMS scam rules as its revealed 90 million scam texts have been blocked

The eye-watering number of scam texts intended to be sent to Australian phones has been revealed as a major telco becomes the first to fall foul of new rules.

Nearly 90 million scam texts have been blocked since July.

Shocking figures have revealed the number of scam texts blocked under new rules, as global telco Modica becomes the first company to be called out for breaching the regulation.

An Australian Communications and Media Authority investigation found Modica, a messaging based platform, allowed customers to send SMS using text-based sender identification, including names, without making sufficient checks to ensure they weren’t being used to perpetrate scams.

The breach is the first under new rules established by ACMA in July that required telcos to identify, trace and block SMS scams.

In the first six months of the rules coming into play, nearly 90 million messages have been blocked.

ACMA Chair Nerida O’Loughlin said the rules were in place to reduce scams that use sender IDs to pose as legitimate organisations such as government agencies, financial institutions and road toll companies.

Nearly 90 million scam texts have been blocked since July. Picture: NCA NewsWire / David Crosling

“This is a widely used trick used by scammers to gain consumer trust,” Ms O’Loughlin said.

“Sender IDs generally display as a name on mobile phones and impersonating well-known brands allows the texts to slip into legitimate message streams from the brands.”

The investigation found Modica did not have processes in place to ensure all its customers provided evidence to confirm they had a legitimate case to use the text-based sender IDs.

Ms O’Loughlin said Modica also failed to report to the ACMA the number of scam SMS it had blocked for the period between July and September 2022, as required by the rules.

“While we did not find evidence any scammers had used the vulnerability created by Modica, its failure to have adequate processes in place put people at risk of receiving SMS scams,” she said.

“It is vitally important that all Australian telcos have processes in place to ensure their customers sending this type of SMS are who they say they are.

“Uniform action is required across the sector as our experience has shown scammers will target the weakest link in telco systems to reach Australians.”

Communications Minister Michelle Rowland says the ACMA rules to stop scams are working. Picture NCA NewsWire/ Gaye Gerard

Modica Group Limited has been directed to comply with the new rules.

If future breaches are found, the telco may face stronger enforcement action such as commencement of proceedings in the Federal Court.

Communications Minister Michelle Rowland said the rules ensured there was strong compliance for telcos operating in Australia.

“Fraudsters cause financial and immeasurable emotional and mental stress by impersonating legitimate organisations every day, and we thank the ACMA for its important work to help protect Australians,” Ms Rowland told NCA NewsWire.

“Nearly 90 million scam texts have been blocked in the first six months since the registration of the industry code, sending a strong message to scammers that we are in this fight for the long haul.

“One more scam is one too many, and cases like this prove the action we are taking to fight noncompliance by telcos is effective, as well as serving as a warning to other companies.”

Assistant Treasurer Stephen Jones said the ACMA rules ensure consumers were protected from scams.

Assistant Treasurer Stephen Jones gives says people need to stay vigilant when they get a suspicious text message. Picture: NCA NewsWire / Christian Gilles

“That’s why we took a comprehensive policy to the election, including a new National Anti-Scams Centre, tougher codes and a dedicated Minister to deal with these issues,” Mr Jones said.

“Australians are losing around $4bn a year to online fraudsters, enough is enough.

“Everyone needs to take this seriously, from banks to telcos to social media platforms.

“When they don’t, they can expect to be asked why.”

Originally published as Telco breaches new anti-SMS scam rules as its revealed 90 million scam texts have been blocked