Proposed Australian Law Threatens Companies with $50 Million Penalties for Allowing Scams
A proposed new code is in the works to prevent Australians from losing nearly $3 billion to scammers, as they did last year.
Under the proposed new law, companies that enable scammers could face penalties of up to $50 million ($33.4 million) and be required to compensate victims.
The Australian Competition and Consumer Commission (ACCC) reported over 601,000 scams in 2023—a record high and an 18.5 percent increase from the previous year, costing victims $2.74 billion.
As of now, Scam Watch has documented losses of at least $159 million from 164,111 scams this year.
Minister for Financial Services Stephen Jones emphasized the need for improved standards and protections, announcing the new Scam Code Act.
The Act will mandate companies to adhere to minimum standards for preventing, detecting, and disrupting scams, as well as responding to and reporting such crimes.
Australia’s laws will hold platforms like Facebook, Google, and TikTok accountable, unlike in the UK where banks are solely responsible.
Telecommunication companies will be required to crack down on scam messages and phone calls.
According to Jones, social media platforms must also face consequences if they allow scam content to be advertised and individuals suffer financial losses as a result.
Individuals impacted by online scams will be able to seek compensation from the advertising platform, telcos, and both the sending and receiving banks, with the Australian Financial Complaints Authority (AFCA) handling cases.
Response to the Move
The Australian Banking Association (ABA) welcomed the decision, recognizing it as vital for protecting the community.
Organizations like CALC, CHOICE, ACCAN, and Super Consumers Australia have also shown support for the announcement, highlighting the importance of addressing scams comprehensively and providing clear pathways for redress.
Existing Systems Working: Ombudsman
The Telecommunications Industry Ombudsman stated that the current dispute resolution system is effective in addressing consumers’ problems, emphasizing the need for simplicity and accessibility in seeking solutions.
Despite efforts by tech companies to introduce voluntary rules through the Australian Online Scams Code, the government insists on implementing stricter measures to align with community and government expectations.
