Boards of banks, telecommunications providers and digital platforms will be the first required to implement and monitor “robust measures” against scams under a proposed regulatory framework that marks the latest stage in the government’s war on scammers.
As outlined in a new Treasury consultation paper, the Scams Code Framework (SCF) would create an overarching framework for combatting scams, within which regulators would create a bevy of sector-specific codes and standards tailor-made to help businesses in each sector prevent, detect, disrupt, and respond to scams.
Social media, content aggregation, advertising, and other digital communications platforms are a particular focus for the SCF, with the consultation paper noting that such services are “a primary origin and contact method of investment scams” that took $377 million from Australians last year alone – with social media services being scammers’ second most favoured method for contacting victims.
Entities covered by the code would be required to “take a consistently proactive approach to combatting scams,” the paper suggests, with principles-based obligations allowing businesses to tailor their efforts to their industry sector’s unique challenges and scam-related trends.
To avoid publication of operational or technical details that would help scammers, anti-scam strategies would not have to be made public – but the plans would be subject to ACCC review and would need to be signed off at board or equally high levels within the business.
This would ensure “a high level of priority and oversight” that would be backed with regular reviews of anti-scam strategies, monitoring of their effectiveness, and reporting compliance to senior business executives “to ensure that the strategy is effective and being adhered to”.
The proposed code also emphasises collaboration between businesses and government, with regulated businesses required to “share and act on” information about scams by notifying other businesses and the new National Anti-Scam Centre (NASC) when they learn about suspected or identified “organised large-scale scam activity” or rapidly emerging new scams “where there is a significant risk for consumers”.
Businesses would also need to be prepared to act on instructions from the NASC and other regulators when scam activity is identified – for example by removing scam content, blocking identified scam users, warning consumers that have interacted with an identified scam or scammer, or providing consumers with guidance about actions they should take if they have been affected.
The framework will initially focus on sectors most targeted by scammers but other sectors – superannuation, cryptocurrency exchanges, payment providers, and online marketplaces – may likely be added to the framework in the future.
“Behind every dollar lost to scams is a tragic story, but we’re making every effort to get those losses down,” Assistant Treasurer and Minister for Financial Services Stephen Jones said in releasing the new consultation paper.
The new codes, he said, “would make it really clear what the obligations are on industry to prevent scams and better protect people and businesses.”
Fingers in the dike?
The proposed SCF is the latest in a series of anti-scam measures taken by the government and industry, following on from initiatives such as the establishment of the NASC earlier this year; creation of an anti-scam fusion cell and cross-sector ‘hit squad’; ACCC approval of bank collaboration on anti-scam measures; creation of a financial industry Fraud Reporting Exchange (FRX); establishment of a nationwide SMS registry to help telcos block scammers; cross-checking phone and banking activity to see whether customers are being actively scammed; the recent launch of a bank payments screening system; and ongoing work with ASIC that has helped identify and take down thousands of investment scam websites, with 20 more “dodgy” sites being taken down every day.
The multi-faceted approach to fighting scams comes amidst an ongoing tsunami of scam activity that has taken over $429 million from Australians so far this year – even before the commencement of the traditional surge in scam activity during a year-end shopping season that is expected to see Australians spend nearly $67 billion by Christmas.
Creation of the SCF will take time as the government builds the framework from the ground up – including discussion about exactly how to define a scam and what sector-specific terminology is needed to encapsulate fraudulent practices specific to each industry.
Yet with scammers deploying new AI tools to trick their victims and unsuspecting consumers being caught out on a daily basis, Minister for Communications Michelle Rowland warned that combating the massive volume of scam activity must be a collaborative “whole-of-society effort”.
“Government, industry and the community all have a role to play,” she said. “The discussion paper will inform our next steps, but scammers are on notice: the Australian government will use every tool at our disposal to stop them ripping off hard working Australians.”
Submissions are open until 29 January 2024.
Members of the public who want to participate on a less formal basis have also been invited to take part in a short survey where they can share their experiences with scams.