According to recent estimates, scams have become a nationwide crisis in Australia, costing consumers almost half a billion dollars in 2023. Whether it's phishing emails, phone scams, or online payment fraud, Australians of all ages face the frightening reality that they may fall victim at any time.

In the face of this crisis, a coalition of Australia's leading consumer advocacy groups demands that the industry shoulder more of the financial burden.

They argued that customer reimbursement should be at the heart of the federal government's proposed new scam laws, which are currently under public consultation.

In response to the Treasury’s Scams - Mandatory Industry Codes consultation paper, various groups, including The Consumer Action Law Centre, CHOICE, and the Australian Communications Consumer Action Network, are calling for mandatory reimbursement of consumer losses.

Stephanie Tonkin, CEO of the Consumer Action Law Centre, insisted that industry liability must be central to the regulatory framework addressing scams.

Consumer groups argued that institutions should shoulder scam losses. Image source: Tara Winstead/Pexels

'It’s the only workable approach to effectively disrupt scams and protect consumers from their loss,' she said.

Ms Tonkin argued that if industries that handle people's money and personal information were to bear the cost of scams, they would be incentivised to invest more in systems and technologies to keep customers safe.

The Australian Securities and Investment Commission (ASIC) reported last year that Australian bank customers are shouldering 96 per cent of scam losses across the banks.

The report also found that banks detected and stopped only around 13 per cent of scam payments made by their customers.

What’s more, the report also said just 2 to 5 per cent of scam cases ended in reimbursement among different banks.

The consumer groups are proposing a series of measures to combat scams, including a 'fair, simple, fast and effective' dispute resolution pathway through customers’ banks, with a decision required within five days.

They also suggested that consumers should be reimbursed upfront before institutions, including banks, digital platforms, and telecommunications providers, pursue each other’s failures and inactions via a separate mechanism.

Ms Tonkin believed that the core principles are a positive step forward, but they fail to meet the community's expectations of ‘tough new industry codes’ or ‘high standards of liability’, which the government has been promising for the past year and a half.

‘The upcoming mandatory laws and codes should be modelled around improving consumer outcomes and preventing harm, rather than solely relying on businesses to comply with minimum obligations,’ she explained.

‘(This approach) will continue to result in victim blaming and shifting obligations and costs onto consumers who are near powerless to detect or prevent sophisticated scams from occurring,’ Ms Tonkin added.

The groups are urging the Australian government to adopt a victim compensation model similar to the one set to take effect in the UK in October this year.

Under the UK's new regulations, the costs of customer reimbursement will be split 50:50 between the institution sending the consumer’s funds and the one receiving them.

Most scam victims will be reimbursed within five business days, with additional protections offered for vulnerable people.

However, not everyone agrees with this approach. Australian Banking Association Chief Executive Anna Bligh warned that such a system could lead to problems.

'Some of this is about taking personal responsibility for how careful we are with protecting our passwords, thinking twice about the kinds of payments that we're making, and being really careful about whether or not it's a legitimate organisation that we're paying,' she said.

‘The money that banks have is your money,’ she pointed out.

‘If we had a system where banks used your money to reimburse every customer that had authorised a scam payment, I think we'd end up with some real problems in the system.’

Scams are fraudulent schemes designed to deceive people into parting with their money or personal information. They come in many forms, from investment scams promising high returns to romance scams where fraudsters pretend to be interested in a relationship to gain trust and money.

Scammers are becoming increasingly sophisticated, using advanced technology and psychological tactics to trick their victims.

They often impersonate legitimate businesses or government agencies and may contact you by phone, email, text, or through social media.

Protecting yourself from scams requires vigilance and knowledge. Here are some tips:

• Be wary of unsolicited contact: Be cautious if you didn't initiate the contact. Legitimate businesses rarely contact customers out of the blue to ask for personal information or money.
• Do your research: If unsure about a company or offer, do some digging. Look for reviews or complaints online, and check if the company is registered.
• Protect your personal information: As a general rule, never give out your personal or financial information. Use strong, unique passwords for your online accounts and change them regularly.
• Be sceptical: If something seems too good to be true, it probably is. High returns with no risk, offers that require immediate action, and requests for payment via unusual methods (like gift cards or wire transfers) are all red flags.
• Report scams: If you think you've been scammed, report it to your local law enforcement and to the Australian Competition and Consumer Commission's Scamwatch: https://www.scamwatch.gov.au/report-a-scam.

Lastly, members: act fast. If you suspect you’ve already been scammed, immediately contact your bank and change your passwords and/or log-in credentials where necessary.

Remember, scams can happen to anyone. The best defence is to stay informed and be cautious.

Key Takeaways

• Consumer advocate groups in Australia are urging the government to include mandatory reimbursements for scam victims in the proposed new scam laws.
  
• The groups asserted that industries should bear more of the cost of scamming, focusing on banks and other gatekeepers of financial and personal information to incentivise stronger protective measures.
  
• An ASIC report indicated that Australian bank customers currently bear 96 per cent of scam losses, with low reimbursement and detection rates by banks.
  
• The consumer groups proposed that the upcoming mandatory laws and codes should focus on improving consumer outcomes and preventing harm rather than just ensuring compliance with minimum obligations.
  

What’s your take on this, members? Have you or someone you know been a victim of a scam? Share your experiences and thoughts in the comments below.

 

[Staffordshire Whippet]

"Every child wins a prize" mentality on a truly enormous scale.
In this case, every stupid/gormless/greedy/indiligent punter who can't work out that "if it sounds too good to be true, it probably isn't" is to be looked after by the wider community who DO actually have a lick of sense? Who pays?

 

[maggiej]

I agree with Anna Bligh. My idea would be for banks and institutions would be to not release any funds made by the customers for at least 2 days. It seems from recent reports that people seem to realise shortly after making payments to these scammers that they have been caught and then try to cancel but unfortunately, the banks have already released the funds to the payee. Otherwise we would all be paying banks etc a fee to cover this happening just another way for banks to raise more money from all of us.

 

[Jo Piper3]

If scammers were aware that the funds received from victims would repaid, it may encourage them to get even worse. Maybe not publicise this service?

 

[rhuddy]

Financial, Energy, Communications, Insurance Companies and Institutions seem to be a target for scammers stealing customer's personal information. These Companies and Institutions advise you to contact them IMMEDIATELY to report any suspicious transactions.
Am I the only one that waits up to 2 hours for someone to answer your call for help or get connected to an Overseas Call Centre Operator who is difficult to understand and only reads off useless prompts on their computer screen.??
Maybe the word IMMEDIATELY should be deleted from their advice.

 

[Mrtnst]

"Every child wins a prize" mentality on a truly enormous scale.
In this case, every stupid/gormless/greedy/indiligent punter who can't work out that "if it sounds too good to be true, it probably isn't" is to be looked after by the wider community who DO actually have a lick of sense? Who pays?

Many scams are easy to see, but not all.

After my phone and health fund providers were both hacked I found an overseas charge on my credit card that I knew nothing about.

I immediately cancelled the credit card and advised the bank that it was a fraudulent charge.

But the credit card company claimed that the transaction had been 'verified' via my phone.

My phone company could not find any record of a message being received through my account on the day of the transaction, but I was still refused any refund, because the credit card company insisted that I must have approved the payment.

 

[Jo Piper3]

Many scams are easy to see, but not all.

After my phone and health fund providers were both hacked I found an overseas charge on my credit card that I knew nothing about.

I immediately cancelled the credit card and advised the bank that it was a fraudulent charge.

But the credit card company claimed that the transaction had been 'verified' via my phone.

My phone company could not find any record of a message being received through my account on the day of the transaction, but I was still refused any refund, because the credit card company insisted that I must have approved the payment.

Sorry for your loss.