Source : THE AGE NEWS
Technology giants have told the government they should not be expected to fund compensation to victims of scams conducted on their platforms, claiming banks should be entirely responsible for refunding Australians who lose billions of dollars to fraudulent schemes each year.
Banks and technology giants are at loggerheads over the government’s planned anti-scam laws, which would impose fines of up to $50 million on banks, mobile networks and social media companies that fail to act on preventing scams.
Financial Services minister Stephen Jones has committed to make bank, telcos and online operators liable for scam losses.Credit: Alex Ellinghausen
In a new submission to the parliamentary committee examining the government’s Scams Prevention Framework bill, DIGI, which represents tech giants such as Google and Facebook’s owner Meta, has hit back at the federal government’s proposed new laws and sought to play down the responsibility of social media platforms as a “vector” for scammers.
Even though scammers may use online forums and social media platforms to initially target their victims, “initial contact alone is only a small part of the scammers’ process”, DIGI argued in its submission.
“It is important to emphasise that digital platforms, including social media services, are not an equal vector as the banking and telecommunications sector in relation to scams,” DIGI said.
“While scammers can employ online forums, their final step always involves theft through financial services after securing the victim’s financial information; 100 per cent of scams involve a financial service. Focusing anti-scam interventions on banks – including liability – would be simpler, easier for consumers to understand, and more effective.”
Australians lost almost $3 billion to scams between January and November 2024 – down from $4.5 billion the prior corresponding period – and reported more than 230,000 scams, according to the National Anti-Scam Centre. The top contact methods were email (35 per cent), text message (32 per cent) and phone calls (16 per cent), while about 6 per cent of victims were identified on social media.
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 federal government’s proposed anti-scam reforms would not follow the British model, in which banks are required to reimburse scam victims in most cases. Instead, it would aim to share the responsibility between banks, tech platforms and telcos.
Banks have long argued social media firms have not done enough to help fight scams, while banks and telcos have called for an economy-wide approach and asked the federal government to apportion proportionate liability on each industry.
The Communication Alliance, representing telcos, said it supported a “waterfall approach” to compensation, which would mean banks have the first line of responsibility as the custodians of their customers’ money and pay full compensation if found in breach of their obligations.
An ad running on Facebook and Instagram this week linked to a scam website featuring a fake endorsement from businessman Dick Smith.
“If banks are in compliance with their regulatory obligations, but other sectors are not, then other sectors involved in the execution of a scam would be required to pay compensation,” Communications Alliance chief executive Luke Coleman said.
“While all sectors have a role to play, legislation should not be based on the premise that each of the designated sectors bears equal liability for losses incurred as a result of a scam.”
The Australian Banking Association in a statement attributed declining scam losses in Australia to the “whole of ecosystem approach”, adding it was crucial the Commonwealth tackled scams from every angle.
“That means ensuring banks, telcos and social media platforms are all accountable for the actions they take to protect Australians,” a spokesman said.
The Australian Consumer and Competition Commission also made a submission to the inquiry, which must report back by the end of this month, supporting the Australian Financial Complaints Authority as the sole external dispute resolution body for scam-related complaints.
It also warned the reforms should not be designed in a way that pushes victims to turn to third parties to help them recover their money, amid criticism from consumer groups that the proposed scheme puts too much onus on consumers to fight for redress in lengthy dispute resolution processes that could take between 18 months and two years.
“While some of these third parties can offer consumers a legitimate service, there is considerable evidence that scammers also mimic recovery services to re-engage victims,” ACCC said.
The Telecommunications Industry Ombudsman, meanwhile, criticised the federal government for “rushing” the bill and not giving stakeholders enough time to provide feedback on the dispute resolution process.
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