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An Australian Treasury minister has rejected calls for a UK-style mandatory reimbursement model for scam victims, arguing that an industry code for key sectors offers a more "extensive" solution.
Stephen Jones, assistant treasurer and minister for financial services, said last week that he does not believe that the UK’s incoming rules for authorised push payment (APP) fraud are “fit for purpose”.
Speaking at the National Press Club of Australia in Canberra, Jones criticised the UK’s strategy on APP fraud for being narrowly focused on compensation at the expense of prevention.
“I am deeply concerned that there is not enough weight put into prevention,” he said. “It's a compensation scheme — yep, that's good — but surely the objective has got to be to prevent your country from being a target in the first place?
“Now, if you're a criminal gang and you know that there's a country out there that'll always compensate a victim, that has great potential to make your country a first resort.”
Jones said he opposes the UK model because, in addition to incentivising scammers, he believes that, in many cases, it will place liability for reimbursement in the wrong hands.
Using the example of puppy scams on Facebook Marketplace, which were “very common” during the COVID-19 pandemic, the minister argued that the UK’s focus on banks leaves social media companies “off the hook”.
In Jones’ example, the victim was a member of Broken Hill Credit Union, a rural New South Wales financial institution with only a few thousand customers.
“Under the UK model, Broken Hill Credit Union is liable for an ad that was placed on Facebook Marketplace, that Meta took advertising revenue on, and that Broken Hill Credit Union had no knowledge of,” he said.
“Why is it more fair, or why is it more likely to decrease scams, if we hold a small regional credit union liable for something that was published and propagated on a platform of one of the biggest companies in the world?
“Frankly, you'll take a while to convince me that that's a better and more fair outcome.”
Industry codes for key sectors
In contrast to the UK, Australia’s Labor government is drafting mandatory industry codes for key sectors within the scam “ecosystem”.
Under this model, scam victims would be entitled to compensation only in cases of gross negligence by entities within these key sectors, starting with banks, telcos and social media companies.
In other words, if these entities can demonstrate that they fulfilled all of their scam-fighting obligations under the code, a customer who is scammed will not be entitled to compensation.
For example, telcos will be required to block known scammers and share intelligence on scam numbers with the wider ecosystem.
Similarly, social media companies will be required to verify the identities of advertisers on their platforms and remove scam posts.
As covered by Vixio, ID verification for social media advertisers has already been introduced in Singapore, as of June 2024.
Another benefit of the industry code model, as argued by Jones, is that in cases where the industry codes are broken, liability for reimbursement can be shared across sectors.
“Ensuring that there is a system where the victim gets redressed because somebody else has stuffed up is absolutely critical,” he said.
Industry codes ETA: 2025
The Treasury is hoping to introduce a bill outlining the mandatory industry codes “as soon as possible”, the minister said.
The industry codes will form the “centrepiece” of the Labor government's continued “war on scams”, and the draft legislation is seen as a priority issue by Prime Minister Anthony Albanese, said Jones.
If adopted, the industry codes are likely to come into effect by the end of 2025, after which the legislation will likely be expanded to target other sectors.
Also in 2025, Australia’s confirmation of payee (CoP) addressing system — designed by Swift — is expected to go into effect, and is likely to reduce instances of APP fraud.
Industry reaction
Sources who spoke with Vixio said that calls for mandatory reimbursement of scam victims are understandable, given the emotional toll on victims and the financial losses incurred.
However, there is broad support for the mandatory industry codes proposal being pursued by Labor, with its focus on prevention over reimbursement.
Rehan D'Almeida, CEO of FinTech Australia, said that increasing investment in fraud detection and prevention systems will ultimately safeguard consumers and reduce the number of successful scams.
“This, complemented by broader education and awareness campaigns, will ensure that technology aimed at improving the financial wellbeing and awareness of Australians is doing what it’s intended to do,” he said.
Luke Raven, founder and principal of Raven AML, said that mandatory reimbursement would mean “higher costs, slower payments, less freedom and more fraud”.
In an interview with an Australian broadcaster, the CEO of the Australian Banking Association (ABA), Anna Bligh, said that mandatory reimbursement that targets banks would not solve the root cause of scams.
“There’s a real question here about how the scam came to the customer,” she said. “If it came through a telco, if it came through a social media platform, and if the bank warned the customer that this was a scam, and they went ahead with the payment.
“I do think there’s a legitimate question here about whether or not banks are really the ones that should be stumping up the cash.”
