If you have ever been the target, let alone victim, of an online scam, you will appreciate that the cost is far greater than economic loss. Despite the perpetrators often residing thousands of kilometers away and their quarry indiscriminate, it feels personal. The Commonwealth Fraud Prevention Centre (the Centre) reveals that this has the potential to “be a traumatic experience that often causes real and irreversible impacts for victims, their families, carers and communities”.
Globally, scams impact the digital economy and national wellbeing by undermining the Government’s ability to deliver services and achieve intended outcomes, eroding the reputation of industries and businesses reports the Centre, further warning that scams can even lead to immediate and long-term environmental damage through pollution and damaged ecosystems and biodiversity.
Australia has a track record in addressing scams. In July 2023, the government established the National Anti-Scam Centre Advisory Board (NASC) within the ACCC. According to its Terms of Reference, its objectives include:
- collaboration and engagement;
- expert advice;
- visibility;
- intelligence sharing; and
- coordinated information dissemination.
Other measures included:
- work by the Australian Securities and Investments Commission (ASIC) to identify and take down investment scam websites;
- work by the Australian Communications and Media Authority (ACMA) to establish Australia’s first SMs sender ID registry; and
- funding of specialist support services for victims of identity theft.
Contemporaneously, the Government committed to introduce new mandatory industry codes outlining the responsibilities of the private sector in relation to scam activity, with a focus on banks, digital communications platforms and telecommunications providers.
In November 2023, Treasury and the Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDCA) sought feedback on the proposed features of the Scams Code Framework which were outlined in a discussion paper, “Scams – Mandatory Industry Codes Consultation paper” (the paper).
The paper noted that:
The primary objective of the Framework is to set clear roles and responsibilities for the Government, regulators, and the private sector in combatting scams. This includes ensuring that key sectors in the scams ecosystem have measures in place to prevent, detect, disrupt, and respond to scams, including sharing scam intelligence across and between sectors.
Further, the paper stated that the proposed Framework is underpinned by three key principles, addressing the gaps in the current approach:
- Principle 1: A whole-of-ecosystem approach to address scams;
- Principle 2: The Framework must be flexible and responsive; and
- Principle 3: The Framework will complement and leverage existing interrelated regimes, systems and initiatives.
Building on responses to the consultation, on 13 September 2024, the Government released draft legislation which implements the Scams Prevention Framework. The Government is seeking feedback until 4 October 2024 on the draft, which it describes as a “whole‑of‑ecosystem approach to reduce gaps which scammers can exploit”.
The Treasury notes that the framework drives action against scams through strong obligations including:
- tough penalties for non‑compliance; and
- dispute resolution pathways for consumers to seek redress.
The Minister for Financial Services can designate sectors under the framework and participants in these sectors must have measures to prevent, detect, report, disrupt and respond to scams.
The Minister has advised that the framework will first apply to:
- banks;
- telecommunications; and
- digital platform service providers – beginning with:
- social media;
- paid search engine advertising; and
- direct messaging services.
Although implementation of the framework will necessarily mean costs will be incurred by regulated designate sectors, given the value of scams to the economy and the vulnerable nature of many of the victims, it will be money well spent.
This topic is relevant to the law, practice and regulation of Australian financial system institutions which is covered in Chapter 1 of the commentary of Thomson Reuters’The Law Relating to Banker and Customer in Australia. This publicationfalls within the Banking and Financial Services Practice Area on Westlaw that has many services designed to complement each other to provide the breadth of coverage of a single compendium but with the in-depth analysis that specific focus areas will allow. In addition, the Alert and the report series will also enable practitioners to keep up to date with pertinent caselaw. To subscribe to the Banking and Financial Services Practice Area on Westlaw, contact Thomson Reuters.
