As more people use digital services, scams are becoming a bigger threat. With Australians using online platforms for banking and socialising, it’s important to have strong protections. The Australian Federal Government’s proposed Scams Prevention Framework aims to reduce scams and protect consumers.
The situation in 2024
Scams in Australia are a huge problem, costing individuals and businesses billions every year. Scammers use tricks like phishing emails and fake investment schemes that can cross multiple different sectors including banks and other financial services, social media companies and telecom companies, making it essential for the government to create clear regulations.
Right now, scam victims often have minimal or no avenues to pursue scammers or the banks and telecom companies that let the scams happen.
What is the proposed legislation to reduce scams and protect consumers?
The proposed Scams Prevention Framework is a plan to tackle scams in Australia. Here are the main points:
Prevention of scams
Banks, telecom companies, and other organisations must take steps to stop scams. While specific actions haven’t been announced yet, these are likely to include new policies to keep scammers off their platforms and educate staff and consumers about scams.
Mandatory reporting
Banks, social media and telecom companies that see scams will need to report them to the ACCC, which will help improve data collection and response efforts.
Consumer protections
The framework focuses on protecting consumers, ensuring they can easily access information and support when they fall victim to scams. This includes clearer ways to report scams and get help.
Compensation for victims of scams
A key part of the legislation is a compensation scheme to help people who lose money to scams. However, victims will need to prove that their bank, social media or telecom company didn’t take reasonable steps to prevent the scam, which might discourage some from coming forward.
Public awareness campaigns
The plan includes ongoing education campaigns to inform people about common scams, how to prevent them, and how to report them.
Collaboration with financial institutions
Banks, social media and telecom companies will need to work together to create better protections against scams, including monitoring for suspicious transactions.
This approach emphasises consumer protections and compensation, but its complexity might make it harder for people to access compensation. There are also concerns about whether AFCA (the body suggested to handle consumer scam complaints) can effectively manage the increased workload since it is already under strain.
Concerns with the proposed Scams Prevention Framework
This proposed framework is a significant step forward in addressing scams in Australia and is mostly a positive move. However, it doesn’t fully match the protections seen in some other countries, like the UK. We worry about how vulnerable victims will navigate the compensation process when dealing with large, well-resourced companies.
In October 2024, we made submissions to the Government aimed at clarifying some key parts of the proposed legislation and making some recommendations for consideration. You can read our submission here.
Challenges ahead for legislation to protect consumers from scams
Putting new regulations into action can be complicated, especially as the digital world keeps changing. It will also be important for consumers to take part in educational programs and report scams, for the framework to work effectively.
Conclusion
The proposed Australian Scams Prevention Framework is a bold and necessary plan to fight the growing issue of scams. By focusing on consumer protection, education, and collaboration, Australia can create a safer online environment. As discussions about the legislation continue, it’s crucial for individuals to stay informed and proactive in fighting scams.
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