Are the government's scam crackdowns working? Aussie man's $1 million ordeal with scammers raises questions
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The Australian government's proposal to crack down on scams garnered mixed reactions and for a good reason.
The initiative—which could impose new obligations and hefty fines on banks, telcos, and social media platforms—was a response to the alarming rise in scams that left many Australians, particularly seniors, vulnerable to financial devastation.
David Sweeney's story reflected the sentiment Aussies harboured about the proposed crackdown.
His 89-year-old father fell victim to an overseas investment scam and lost about $1 million in savings.
This predicament led to a gruelling five-year battle with three banks to recover the amount lost.
'It knocked the stuffing out of my father. The stress was incredible,' Sweeney recounted.
'He lost weight, he had to go on the pension, and he lost faith in humanity. It was a million dollars. This is a big moment in your life.'
David Sweeney's experience with the banks that denied liability for his father's losses highlighted the challenges victims face in the digital age.
It was only after an FOI request that ASIC warned the banks about the scam—months before the Sweeneys' ordeal—that the banks offered them compensation.
While the government's draft bill focused on scam prevention with fines up to $50 million, it has been criticised for the lack of detail on compensation and the mandatory codes of conduct for the industries involved.
The timeline for the bill's implementation is also uncertain due to two factors: the work required to develop crackdown tools and a looming election.
A contentious point of the proposed legislation is the rejection of a reimbursement model.
A similar model was introduced in the United Kingdom.
It initially compelled banks to reimburse fraud victims up to £415,000—about $811,000—unless the victims were at fault.
However, this figure has been significantly reduced to £85,000 or $166,325.
Consumer advocates, including the Consumer Action Law Centre and CHOICE, vocally supported the reimbursement model.
They stated that it would provide a stronger incentive for financial institutions to improve their systems and trace fraudulently transferred funds.
However, the draft bill released did not adopt this model.
Minister for Financial Services Stephen Jones stated that a UK-style reimbursement model could turn Australia into a 'honey pot' for scammers.
Instead, the bill focused on prevention.
A report by ASIC revealed that the Big Four banks repaid less than 4 per cent of the $558 million their customers lost to scams in June 2022.
Consumer groups continue to fight for reimbursement and push for its inclusion in the codes of practice.
As an alternative, the draft legislation proposed a single external dispute resolution (EDR) scheme for all scam complaints.
The Australian Financial Complaints Authority (AFCA) should be able to provide additional funding for this.
However, the effectiveness of this scheme is yet to be determined, and it may take years for consumer rights in future codes of practice to be established.
The government's move to address scams is a step in the right direction.
Yet, whether it goes far enough is a matter of perspective.
The measures may seem too little, too late for those who have been ripped off their hard-earned money.
The financial and emotional damage inflicted by scams could be life-altering, with some going through stressful ordeals in their supposedly golden years.
What do you think of this development? What measures would be most effective in combating scams? We invite you to share your thoughts and experiences with scams in the comments below.
The initiative—which could impose new obligations and hefty fines on banks, telcos, and social media platforms—was a response to the alarming rise in scams that left many Australians, particularly seniors, vulnerable to financial devastation.
David Sweeney's story reflected the sentiment Aussies harboured about the proposed crackdown.
His 89-year-old father fell victim to an overseas investment scam and lost about $1 million in savings.
This predicament led to a gruelling five-year battle with three banks to recover the amount lost.
A new bill proposed a hefty penalty for major establishments complacent to scams, yet consumers raised questions about reimbursements for victims. Image Credit: Shutterstock/Roman R
'It knocked the stuffing out of my father. The stress was incredible,' Sweeney recounted.
'He lost weight, he had to go on the pension, and he lost faith in humanity. It was a million dollars. This is a big moment in your life.'
David Sweeney's experience with the banks that denied liability for his father's losses highlighted the challenges victims face in the digital age.
It was only after an FOI request that ASIC warned the banks about the scam—months before the Sweeneys' ordeal—that the banks offered them compensation.
While the government's draft bill focused on scam prevention with fines up to $50 million, it has been criticised for the lack of detail on compensation and the mandatory codes of conduct for the industries involved.
The timeline for the bill's implementation is also uncertain due to two factors: the work required to develop crackdown tools and a looming election.
A contentious point of the proposed legislation is the rejection of a reimbursement model.
A similar model was introduced in the United Kingdom.
It initially compelled banks to reimburse fraud victims up to £415,000—about $811,000—unless the victims were at fault.
However, this figure has been significantly reduced to £85,000 or $166,325.
Consumer advocates, including the Consumer Action Law Centre and CHOICE, vocally supported the reimbursement model.
They stated that it would provide a stronger incentive for financial institutions to improve their systems and trace fraudulently transferred funds.
However, the draft bill released did not adopt this model.
Minister for Financial Services Stephen Jones stated that a UK-style reimbursement model could turn Australia into a 'honey pot' for scammers.
Instead, the bill focused on prevention.
A report by ASIC revealed that the Big Four banks repaid less than 4 per cent of the $558 million their customers lost to scams in June 2022.
Consumer groups continue to fight for reimbursement and push for its inclusion in the codes of practice.
As an alternative, the draft legislation proposed a single external dispute resolution (EDR) scheme for all scam complaints.
The Australian Financial Complaints Authority (AFCA) should be able to provide additional funding for this.
However, the effectiveness of this scheme is yet to be determined, and it may take years for consumer rights in future codes of practice to be established.
The government's move to address scams is a step in the right direction.
Yet, whether it goes far enough is a matter of perspective.
The measures may seem too little, too late for those who have been ripped off their hard-earned money.
The financial and emotional damage inflicted by scams could be life-altering, with some going through stressful ordeals in their supposedly golden years.
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