Scams Prevention Framework Bill 2024
Dr HAINES (Indi) (20:00): I rise to speak on the Scams Prevention Framework Bill 2024. In 2023, Australians lost $2.7 billion to scams. That's an enormous amount of money stolen from families already doing it tough, community groups making their neighbourhoods better places and local businesses just trying to get by.
While recent data shows that total losses dipped in 2023, the reality remains that scams are still happening and that Australia is a key target. When a person is scammed, they don't just suffer a financial loss. Scam victims often experience significant emotional and psychological distress, and this distress can last long after the scam has occurred.
It's why we need a comprehensive economy-wide Scams Prevention Framework, a framework that goes to the source of scams—the banks, the telecommunications providers and the social media networks. We're all familiar with texts pretending to be from trusted organisations like Australia Post with dodgy links that will steal your credit card details, or automated calls, supposedly from the ATO, threatening fines or legal action if you don't pay on the spot.
It feels like every time you go on Facebook or Instagram, deepfake videos imitating celebrities or politicians tell you a life-changing investment opportunity is within reach, only to embroil you in an elaborate investment scam. We lose over $200 per Australian every year to scams because government and big business aren't doing enough to stop scams at the source.
I know we're not doing enough because my office hears from so many people who have lost money to scams, and I want to share with you some of their stories. In 2023, the Wangaratta District Men's Shed had $25,000 stolen in a scam. This was money raised from donations from Commonwealth government grants and community events, put aside to ensure the Men's Shed could continue to play its important role in our local community.
The Men's Shed received a message saying that they had a virus on their computer and to contact Microsoft. They called the number provided and were told their bank account had been hacked and to transfer $400 to fix the issue. They were then told that Microsoft had inadvertently deposited $30,000 into the Men's Shed's account.
The Men's Shed were told to transfer this money back to a Microsoft account, but when they did, the criminal stole $25,000. All along, members thought the emails and calls were genuine. They just wanted to fix a problem, but, instead, they fell victim to a crime.
When they contacted Bendigo Bank, they were told it would take weeks to investigate the matter, and, when they contacted the police, they were told there was not much anyone could do. Last year, I also met Nina, from Wodonga, in my electorate. In 2022, Nina had $11,600 stolen by a 'Hi, Mum' scam.
Nina's daughter was travelling overseas, so when a text arrived from an unknown number, explaining that she'd broken her phone—well, it made sense. Nina said, 'The text used the sort of language we would use when we exchanged our text messages,' and they continued over several days. Understandably, Nina was deeply upset, saying, 'We work so hard for this money, and then these thieves just steal your money and there seem to be no repercussions.' When I spoke to her, she emphasised that Australians should not be left to fight this on their own.
Nina said there is inadequate legislation in place to protect consumers and the banks are leaving their customers in the cold. Another couple in my electorate were targeted by a horrendous scam earlier this year. After scammers deceived the couple into providing their bank card details, they made multiple transactions that added up to $100,000, stolen from their account in just one day.
Even though the scam put their account tens of thousands of dollars into overdraft, the bank did not block these transactions or contact the couple. What I find particularly shocking is that the bank, even after being alerted to the scam, began charging the couple hundreds of dollars in interest because of the overdraft debts. Not only did the bank fail to stop the scam or remediate it; they actually went on to punish their customers further.
In all these stories I'm hearing the same message. Once you've been scammed you're left on your own. Where people have tried to get even some of their money back, they're met with delays by their bank, who tell them that there's not much they can do.
They just have to accept that their money is gone. Some consumers go on to make complaints to the Australian Financial Complaints Authority—the AFCA—but outcomes often favour the banks, with one lawyer representing victims saying that to go to the AFCA you need an experienced commercial lawyer to have any real chance of success. The Consumer Action Law Centre has said that Australia's current scam response 'has been left to industry to lead and as a result, it is consumers, not business, who are paying for 96 per cent of scams losses'.
In the 2023 financial year, the big four banks delivered a record profit of nearly $32.5 billion, yet in 2022 they reimbursed just $22.3 million to scammed customers, or four per cent of total losses. Social media platforms like Google and Facebook aren't doing much better. Even the minister acknowledges that Meta is the biggest publisher of criminal scam content anywhere in the world.
Despite this, and thanks to recent investigative reporting by the Age, we know these social media platforms continue to take big money from advertisers that they know are scamming Australians. This is reprehensible. So I support a robust scam prevention framework that protects consumers and puts the onus on big banks, telcos and social media platforms to do all they can to disrupt and stop scams.
This brings us to the bill before the House today. The bill establishes the Scams Prevention Framework. Under the bill mandatory codes will be developed that have industry-specific prescriptive obligations that sectors must follow.
Under the new framework applicable entities will be required to take reasonable steps to prevent, detect, disrupt and report scams. They must have arrangements in place to protect consumers from scams. Importantly, consumers include small businesses.
The regulator of the framework will be the Australian Competition and Consumer Commission with support from ASIC and ACMA. Initially, the sectors designated by the minister will include banks, telecommunications providers and certain digital platforms. However, the legislation could apply down the track to other sectors, like online marketplaces, superannuation funds and cryptocurrency platforms.
Under the framework if an entity breaches their obligations, regulators will be able to fine them up to $50 million, creating incentives for big business to crack down on scams hurting regular Australians. The bill also prescribes AFCA as the operator of an external dispute resolution scheme. This scheme aims to be the single door for consumers to go through when they have a scams complaint, whether that be with the bank, a telco or a social media site.
A single front door can make it easier to get support and to receive an appropriate remedy. Under the framework, dispute resolution rules will require services to provide the consumer with written documentation setting out how they complied with the Scams Prevention Framework. The government says the framework is a consumer centred approach by legislating obligations and codes that banks, telcos and digital platforms must abide by to prevent and disrupt scams and ensure consumers are protected before the scam occurs.
There is a lot I welcome in this bill—in particular, having a whole-of-ecosystem approach with a single front door to make it easier for consumers to get help. However, I have listened to the concerns of consumer groups and policy experts that say that this bill does not do nearly enough for the people who are ultimately the ones who suffer from scams. The Consumer Action Law Centre, the Australian Communications Consumer Action Network, the Financial Rights Legal Centre, Financial Counselling Australia and CHOICE are all calling on the government to improve this bill.
They want a model where a bank would, by default, compensate a scam victim and then apportion liability across the banking, telco and digital platform sectors. If a consumer has been grossly negligent then a bank or other service will have the opportunity to prove this. It means the consumer is put first and then the banks, telcos and social media platforms.
This matters. These consumer groups are calling this model the 'modified reimbursement model'. It would incentivise industry to do all they possibly can to detect and prevent scams because, if they don't, they will be on the hook to pay up.
Minister for Financial Services, Stephen Jones, has said that, if Australia takes up such a reimbursement model, 'You will get every scammer in the world saying, "Come to Australia, it's a victimless crime because the bank will always pay".' I disagree with the minister on two fronts. Firstly, this implies we cannot do two things at once, that we cannot prevent scams while also making it easier and fairer for consumers to seek redress.
Secondly, it ignores the data from other jurisdictions, such as the United Kingdom, that shows that, when the onus of reimbursement is on big business and not the consumer, total scam losses go down, and consumers get more of their money back. This shows to me that the banks are not doing nearly enough on scam detection and prevention here in Australia. Requiring them to reimburse scam victims upfront and then make their case to the ACCC sounds like a pretty good incentive to me and would be better reflective of the power imbalance between these multibillion-dollar companies and everyday Australian consumers.
Similarly, while a single-door model is needed and is welcome, there are concerns about how open this door really is. The Consumer Action Law Centre plotted the journey a typical bank customer would have to take to get redress under the current bill. They say it's almost a 30-step process and could take between 18 months and two years, and, even at the end of it, victims might not get their money back because the onus lies on them to prove that the banks did something wrong.
This bill would deter many victims from seeking redress in the first place, undermining the very purpose of the bill and ensuring the banks, telcos and social media platforms are not held to account and Australians lose more to scams. To address these concerns and truly put the consumer at the centre of scam prevention, I urge the government to support amendments moved by the crossbench in this place and in the Senate.
I understand these have been drafted with the support of the Consumer Action Law Centre, and these amendments would, firstly, provide better protection for vulnerable people who are victims of scams and, secondly, require banks, telcos and social media providers to give a statement about whether they have complied with their obligations. The statement would be used in internal and external dispute resolution, requiring these entities that often have thousands of employees, including lawyers, cybersecurity experts and fraud management staff, to be totally transparent to a customer who is a victim of a scam about the steps they took to prevent that scam.
This can significantly add to the distress a person is already experiencing, and this amendment would alleviate that. Thirdly, if the government won't implement a modified reimbursement model then they should amend the bill to include a presumption of compensation paid to the scam victim from the regulated entity where that entity has failed to comply with their obligations under this bill.
This would help alleviate the disproportionate burden that falls on scam victims to access compensation. Ultimately, I will support this bill because we must do more to protect Australians from the scourge of scams, but this bill must be improved. Let's put in place a world-class scam prevention framework that makes the banks and social media platforms do everything they can to disrupt and prevent scams and a framework that puts everyday Australian consumers first.