The opinion piece below was written by ACCAN CEO Carol Bennett for the Canberra Times and Australian Community Media about draft anti-scams legislation. It was originally published on 27 September 2024.

Australians lost $2.7 billion to scams in 2023. These are scams we know about - the true losses are likely to be far greater.

The federal government has recently published draft scams prevention legislation (the Scams Prevention Framework), which will be put to the Parliament this year.

It will make an important contribution to disrupt criminal scams. But it has one critical flaw.

What lets the scams prevention legislation down is that consumers must pursue reimbursement through arcane appeal systems, rather than having the presumption of reimbursement from the outset, as will be the case in the UK.

In effect, the legislation places the onus to act on consumers, who have in many instances lost their life savings, rather than incentives on industry to do everything possible to stop scammers in their tracks.

Consumers who have had their life savings stolen are in no position to pursue a claim against a major financial institution due to their failure to protect their savings.

Banks in the UK have been voluntarily reimbursing scam victims at an average rate of 67 per cent since 2019.

This will soon increase to 100 per cent in October, when new mandatory reimbursement laws come into force.

By contrast, Australian banks only reimburse between 2 and 5 per cent of consumer losses, according to the Consumer Action Law Centre. This vanishingly small amount is grossly inadequate.

These scams are not occurring due to negligence on the part of Australians. Individuals alone cannot be the final bulwark against the schemes of criminal enterprises.

The complexity of the new scam assault requires strong action from Australia's largest companies - the banks, telcos and tech companies who make billions from Australian consumers.

Funds stolen from consumers are transferred from bank account to bank account. Telcos convey fraudulent SMS and phone calls, and social media platforms make money from the promulgation of fake websites.

The Australian Communications Consumer Action Network and other consumer organisations welcomed the legislation - with some caveats - when it was announced this month. And we stand by that. This legislation, while lacking, is better than nothing at all.

Too many ordinary Australians are falling prey to domestic and international criminals who use increasingly clever deceptions to steal life savings, home deposits and superannuation balances. Vulnerable Australians, including those in non-English speaking communities and First Nations people are being cruelly targeted.

These days, taking common-sense precautions and "having your wits about you" is not always enough.

Retired Melbourne University finance academic Kim Sawyer could hardly be accused of not knowing the risks of banking fraud. Yet, as Kim has powerfully written, he and his wife lost $2.5 million of their superannuation balance to a scam in 2023.

To their credit, some companies in these sectors are taking steps to address this issue.

For example, Optus and Westpac teamed up this year to create Westpac Safecall, a technology which allows Westpac customers to receive calls via their banking app that are Westpac branded and verified, and show a reason for the call.

At a time when more than 99 per cent of all banking interactions are now made online or via apps, this technology can make a real difference.

But such innovations should be the norm, not the exception.

It has been a generally agreed economic principle for more than half a century that the legal framework should allocate the burden of avoiding a risk to the party that can avoid it at least cost. Banks, telcos and digital platforms have control over the systems and processes that allow for scams to spread - not consumers whose best action to mitigate risk is to cease using these essential services.

This is precisely the thinking that has gone into the new UK mandatory reimbursement laws. It is banks, not individuals, who are best equipped to fight scams, efficiently, at scale across an economy, and who we pay for the privilege of storing our money securely.

With Parliament set to consider the new anti-scam framework by the end of the year, I encourage politicians to put consumers first and preface this legislation with the presumption of reimbursement.

A mandatory reimbursement scheme has been implemented in the UK. Australia needs to act with similar resolve if we want to dispel our place as one of the most scammed countries in the world. Mr Sawyer and millions of Australians who have lost their hard-earned savings deserve nothing less.

Originally posted in the Canberra Times: https://www.canberratimes.com.au/story/8775111/carol-bennett-australia-drafts-antiscam-law-but-misses-key-point/?cs=14258