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Australia’s banking industry has voiced its support for draft legislation that will introduce a mandatory Scams Prevention Framework, targeting key sectors including telcos and social media companies.
Almost a year on from its first consultation on mandatory industry codes for scam fighting, Australia’s Treasury has published draft legislation that aims to bring the proposed codes into law.
As promised, the Scams Prevention Framework will first target key sectors that are deemed crucial to stopping scams at source, before potentially expanding to other sectors in future.
Australia’s Treasury minister will designate regulated sectors under the legislation, beginning with banks, telcos and digital platform service providers (under current proposals).
Social media platforms would be included in the latter category, as would instant messaging platforms and paid search advertising platforms.
In an explanatory note, the Treasury said that future sectors will be considered for regulation as scam methods and trends adapt, and as the implementation of the framework matures.
The reforms outlined in the Scams Prevention Framework aim to halt the “unacceptable” growth in scams targeting Australian consumers, the Treasury said.
According to the Australian Consumer and Competition Commission (ACCC), Australians lost A$2.7bn to scams in 2023.
The Scams Prevention Framework will protect consumers by forcing designated businesses to uphold mandatory minimum standards for scam prevention, detection, reporting, disruption and response.
Designated businesses that fail to comply will be subject to “tough penalties”, including fines of up to A$50m ($33m).
The draft legislation, known as the Treasury Law Amendment Bill 2024: Scams Prevention Framework, is open for comment from stakeholders until October 4, 2024.
Industry reaction
Banks have welcomed the release of the draft legislation, and have praised its cross-sector approach to fighting scams.
Anna Bligh, CEO of the Australian Banking Association (ABA), said that winning the war against scammers will be possible only through collective effort across the entire scams chain.
“Australia has made progress, with scam losses falling; however, holding all parts of the scams chain to account is the only way to properly protect the community,” she said.
“These codes must address the core problem of people being exposed to scams in the first place. That means ensuring telcos and the social media platforms have strong protections in place to stop scams reaching Australians.”
Chris Sheehan, group executive for investigations at NAB, said his institution backs the government’s focus on prevention.
“Scams start with a text message, a phone call, a dodgy social media post or a fake website and banks are often unaware of this activity until the payment is made,” he said.
“That’s why banks, telcos, social and digital media companies all need to play their part before scams reach customers.
“Without that approach, it continues to be a never-ending game of whack-a-mole, with criminals exploiting channels that aren’t pulling their weight.”
A multi-regulator approach
The draft legislation lays out two codes: “overarching principles” that will apply to regulated entities in all designated sectors; and sector-specific codes that will apply to each sector.
The legislation also provides for a multi-regulator system of oversight and enforcement, with the Australian Consumer and Competition Commission (ACCC) acting as the “general regulator” for the overarching principles.
“This approach is supported by the ability of the general regulator to delegate its functions and powers to a sector regulator to ensure the effective regulation of regulated sectors,” the Treasury said.
Obligations under the Scams Prevention Framework
Examples of obligations for all entities under the framework include regularly training staff in scam identification and response, and regularly assessing the effectiveness of existing anti-scam policies and procedures.
Sector-specific obligations include measures such as ID verification for advertisers on social media and paid search platforms, and obligations to investigate all reported scam advertisements within 48 hours.
Banks will be required to verify payee details before transferring funds, and social media and paid advertising platforms will be required to remove reported scam content within 24 hours.
Users of all regulated services must also be offered a “friendly and accessible” method for making a complaint about a scam, including a phone number or online mechanism that can be “reached easily”.
Actionable scam intelligence
Several obligations in the Scam Prevention Framework relate to the handling of actionable scam intelligence.
Under the legislation, a regulated entity has actionable scam intelligence if and when there are “reasonable grounds” for the entity to suspect that a communication, transaction or other activity is a scam.
Actionable scam intelligence can include any information relevant to disrupting the scam activity (or future scam activity), and the receipt of such information carries several obligations.
For example, a regulated entity is required to provide the ACCC, as the general regulator under the framework, with reports of actionable scam intelligence.
Gathering and reporting this information is intended to minimise the harm to consumers from scams.
Dispute resolution
Entities that provide a service that is regulated under the framework must become a member of an external dispute resolution scheme that will be authorised by the Treasury minister for that regulated sector.
The minister’s intention is to authorise the Australian Financial Complaints Authority (AFCA) as the single external dispute resolution scheme that applies to multiple regulated sectors.
Bligh said that banks in Australia welcome the creation of a single complaints body for consumers affected by scams.
“A single complaints body will provide more consistent outcomes for customers and be best positioned to consider each sector’s responsibility for consumer redress where a business has failed to meet an obligation,” she said.
