An epidemic of thievery through digital services costing Australian citizens over $2.74 billion a year has provoked the Government to try new laws; customers will be crying out, “at last!”
Dr Lee Duffield says the key will be more sharing of risk, away from the put-upon customers and small investors, to big corporations; but will they try and nobble it?
A POPULATION of “fed up” consumers objecting to a way of life becoming distorted by a constant game of cat and mouse with criminals is a threat to the Government.
Most Australians know the kind of thing: creeps on the phone offering “deals”; texts from “Telstra” or the “ATO” about to cut off your phone, fine you, or shut down your computer, they say; spurious advertising of services online.
Legislation
Chasing down the offenders is one thing; that should be next. We have not yet seen many convictions; many are outside Australia and the cases are a mixed bag, ranging from lone opportunists to well-resourced, scaled-up networks.
However, to address this social and economic problem now, the Federal Government legislated on 13 February to establish what it is calling a Scams Prevention Framework. It is a new section of the Competition and Consumer Act 2010 (Cth).
If it gets tough enough, it will require banks, the monster I.T. and social media companies, and telecommunications providers to step up to more responsibility and give more effective protection.
DIY security and victim blaming
Unquestionably, the present whole-of-community drive, mobilising the personal resources of millions of people, must be useful protection — but obviously not enough and not good enough. Australia has 600,000 scams annually.
Consumers, doing their bit, take a huge share of the responsibility for prevention, putting up the best do-it-yourself security they can. They take in the endless advice, from banks, insurance, financial advisors and government agencies, on precautions, being vigilant, trusting nobody and keeping up with the latest tricks. As potential victims, they signal a generous resignation to living with the implied victim blaming that goes on when a scam comes off. But is relief on its way?
A change — can it work?
Enter the reform and its chances.
The so-called Framework empowers the Government to govern and regulate in this matter, with one immediate difficulty: it has agreed to a sharing of responsibility across the range of institutions. This means potentially prohibitive legal steps for a customer who has been scammed and wants some compensatory payment, to get responses from the bank, across to the telco, or the internet service provider. A central public agency – like the already-established National Anti‑Scam Centre – might be useful to sort out such cases.
The Australian Banking Association, for one, heaved a sigh of relief and signed on to cooperate, after being reassured about the spread of responsibility across industries. They did not want the United Kingdom model, introduced last October, which places it on the banks, authorising them and expecting them to delay and investigate fraudulent payments, also making them liable to pay compensation for customer losses. The rationale is that the banks in the UK will pull out the stops and find ways to comprehensively defend accounts if they themselves have to make up the lost money.
Common practice in Australia appears to be to trace fraudulently taken money to its next destination, tell the customer they don’t expect to get much cooperation from other institutions that have taken the money and offering the customer a “without prejudice” payment, to go away (often $5,000, sometimes against much larger sums lost; take-it-or-leave-it; two weeks to decide). It is the “David and Goliath” school of customer relations.
And now, we are looking to this change where a customer at fault, through being subjected to deception, might get better relief from a bank or other institution, which has itself followed correct protocols and not acted illegally, but by dint of its structural arrangements (like adequate “payee verification”) and a principle of shared risk.
What regulations on corporations?
A compact guide is provided to the new Australian laws by one of several law firms interested in the change, indicating how the laws are to cover scam prevention, detecting fraud, disrupting ongoing scams, and responding to and reporting of crimes.
Its report says that under the change, banks must implement “confirmation of payee” technology; will be required to respond swiftly to reported scams; and identify and close “money mule” accounts used by scammers.
The so-called tech giants (including Google, Facebook and TikTok) can be held responsible for scams that thrive on their platforms; they will be required to verify advertiser identities and ensure content legality. Telcos must verify sender identities for text messages and will be required to block numbers used for scam calls. (Such protections are provided voluntarily, in certain areas, now set to become mandatory for all.)
The report says:
‘These changes are designed to provide more robust protection for citizens and help businesses be held more accountable.’
Compensation for losses
What about compensation?
Under the scheme for shared liability among these companies, victims can seek fraud compensation from multiple parties, including banks, tech platforms and telcos. Disputes can be escalated to the Australian Financial Complaints Authority (AFCA). AFCA’s maximum payout is currently capped at $1.2 million.
In this report, industry reactions have been cagey. The tech giants “resisted” having to accept mandatory changes; Google claimed that preventing all scam websites in search results wasn’t feasible, but the Digital Industry Group Inc (DIGI) has since agreed to collaborate with the Government.
The banking industry, as said, is mollified for now, saying the system should prove fair and effective. Consumer organisations have tempered their support by expressing concerns about delays in compensation and dispute resolution. The industry groups have bought some time, can negotiate and have been told the Government might go along with a phasing-in of its reform.
An appraisal from another legal source says the reach of the legislation will extend over time:
‘Regulated sectors will initially be banking, telecommunications, digital platforms (social media, paid search engine advertising and direct messaging), with superannuation, insurance, online marketplace and cryptocurrency industries on notice for future designation.’
Serious intentions
The Minister responsible for the change, before himself leaving politics, Stephen Jones, was optimistic about the chances of reform:
Australians finally have a government that is fighting back against scams after being left to fend for themselves for years.
We delivered on our election commitment to establish a National Anti‑Scam Centre and we are glad to see the banking industry taking their own proactive steps.
The regulator, the ACCC, talked about being able to act effectively:
This world-first legislation, it said, enhances protections across the economy by setting out consistent and enforceable obligations for businesses in key sectors where scammers operate.
Under the new legislation, the ACCC will closely monitor regulated entities’ compliance with principles to prevent, detect, disrupt, respond to and report scams.
ACCC Deputy Chair Catriona Lowe said:
The financial crime type, scams, present an unacceptable threat to the Australian community and have had a devastating impact on hundreds of thousands of Australians.
This Bill is a critical step in the fight against scams - creating overarching principles that all members of designated sectors must comply with.
Indicative — size of the problem
A footnote concerning a scam doing the rounds, with some devastating impacts, the “Microsoft scam”, where “Microsoft Support” advertises help with hacked computers, or will post a pop-up with telephone numbers (including the actual customer service number, 132058) on a screen after hacking. The company has posted warnings. Otherwise, what has it done about the scam?
For any company at all, smaller and more concerned about reputation than Microsoft, it would move mountains to end the problem and clear its name. On a similar note, what is Google doing hosting this scam, selling the bogus “Microsoft” prime advertising positions? A dash of “big government”, stronger regulation might settle some of these inquiries.
Will a seemingly “tough new law” administered with some determination actually get large corporations to take a much bigger share of responsibility for what happens within their operations — so that citizens get better protected? Some of these are wholly “free market” in mentality and uninterested in social responsibility, even compliance with Australian law; but (can we trust?) might see the dimension of the marketing problem for themselves if there is no action.
Political leaders, as the present government has recognised, have got that point. We will have to see how it goes.
Have you had personal experience with scamming? With the new laws coming through, now is a good time to get together. If interested in that, please contact IA through admin@independentaustralia.net.
Amongst Dr Lee Duffield’s vast journalistic experience, he has served as ABC's European correspondent. He is also an esteemed academic and member of the editorial advisory board of Pacific Journalism Review and elected member of the University of Queensland Senate.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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