Don’t wait, do something about scams before you’re fined, say industry experts

Banks and telcos shouldn’t need today’s announced legislation of up to $50m in fines to enforce scam protection and should take a proactive position, AFCA chief David Locke says.

Companies could face fines of up to $50m under a new scam prevention framework.

The nation’s largest banks and telcos should not need a government push to enforce better scam protection, but should be proactively taking more action, the Australian Financial Complaint Authority’s David Locke says.

The AFCA chief executive said these businesses “should not wait until they are required by codes to take action but should now take all actions possible to prevent, detect and disrupt scams”.

Mr Locke was commenting after new legislation was revealed on Friday in which the Australian Competition and Consumer Commission would be empowered to take action against companies that fail to act.

The AFCA would also receive powers to arbitrate scam and fraud disputes under the legislation, giving consumers a single complaints authority to take matters to for the first three sectors designated under the legislation.

Most banks and telcos were in favour of the new frameworks. A spokeswoman from Telstra said the company would “welcome a more co-ordinated approach to monitoring and disrupting scams” and that it saw great benefit in different sectors working together on prevention methods.

“We believe [the framework] should be flexible and responsive allowing industry to adapt to new tactics by scammers and leverage existing interrelated regimes, systems and initiatives,” she said.

But the proposal has not proved universally popular with tech companies, with Elon Musk, owner of social media site X, formerly known as Twitter, branding the Australian government “fascists” in a one-word post.

Tech lobby group Digi, which represents X, Google, Yahoo, and Meta, among others, backed the proposal.

The draft legislation “sets a framework” but “the hard work lies ahead in determining the details”, Digi managing director ­Sunita Bose said.

“If every part of the economy that’s exploited by scammers in their attack chain has relevant safeguards in place to bolster their defences, consumers will be better protected,” she said.

Ms Bose pointed to Digi’s Australian Online Scams Code, a voluntary scheme agreed to by some members of the tech sector.

Under the new framework, companies could face fines of up to $50m for failures to stop scams under a proposed model outlined by the Albanese government, amid plans to force the banking, telecommunications and digital platforms to do more to combat scams and frauds.

Assistant Treasurer and Financial Services Minister Stephen Jones.

The government said this single External Dispute Resolution scheme would “will provide victims with a clear pathway for redress”, with AFCA’s oversight creating “end-to-end accountability across the initial designated sectors”.

The proposed scheme will allow the government to designate sectors and establish industry-specific codes of conduct for companies captured under the scam prevention powers.

Banks, telcos and digital platform providers including social media giants and search and messaging platforms will be captured under the mooted scheme.

These sectors will be required to have internal dispute resolution mechanisms for consumers who have been scammed, with the government saying they must be “accessible and transparent”.

The legislation also requires captured companies to share intelligence through timely reporting of scams and fraud.

Assistant Treasurer Stephen Jones said the government was “working to make Australia the toughest target in the world for scammers”.

“Australians are losing too much money to scams and, while we’ve bucked the international trend where scams are doubling every year, losses are still far too much,” he said.

Mr Jones, who is also Financial Services Miniser, said the best way to address scams and fraud was to put “strong obligations” on key companies and industries.

Communications Minister Michelle Rowland.

Communications Minister Michelle Rowland said the scams prevention framework came on top of the government’s efforts to combat SMS duping.

The government budgeted $154m in the 2024-25 budget to tackle scam activity.

The scheme has been broadly welcomed by the banking sector, with the Australian Banking Association backing the model.

ABA chief executive Anna Bligh said the banking sector had called for industry codes ”because only an entire scams chain approach with a major focus on prevention will enable us to beat scammers”.

“These codes must address the core problem of people being exposed to scams in the first place,” she said.

“That means ensuring telcos and the social media platforms have strong protections in place to stop scams reaching Australians.”