Combatting online scams: Government and the banking sector announce new measures

4 minute read  18.05.2023 Kate Hilder, Siobhan Doherty

Government and the Australian Banking Association push forward with anti-scam measures following a year that that saw record consumers scam losses  

Key takeouts

  • The 2023 Federal Budget includes a number of measures focused on addressing online fraud, including the establishment of a new a new National Anti-Scam Centre (NASC) within the ACCC. The new NASC which will coordinate scam disruption activity across industry sectors, government and digital platforms, is set to be operational by 1 July 2023.
  • Separately, the Australian Banking Association (ABA) has announced the launch of a new Fraud Reporting Exchange digital platform (FRX platform) which aims to help banks to respond more quickly and effectively to scams, including through streamlining communication between banks, enabling them to move more quickly to block the movement of money en route or transferred to another bank. The launch of the new platform follows the release of ASIC's report on the big four banks' approach to scam activity (REP 761, summarised) which highlighted various improvement areas.

Combatting scams a key priority

According to the Australian Competition and Consumer Commission (ACCC) losses to scam activity topped $3.1 billion in 2022, a record high, with people experiencing vulnerability also suffering record financial losses. The report also flags that the recent spate of cyber incidents has only increased people's vulnerability to scams.

In light of this, it is perhaps unsurprising that both the ACCC and the Australian Securities and Investments Commission (ASIC) have stepped up their focus on the issue, with ASIC including 'combating and disrupting investment scams' [the highest loss category identified in the ACCC's report] as a key enforcement priority for 2023, and the ACCC likewise identifying scam detection and disruption as a key priority.

The issue is also a focus for government. The 2023-24 Federal Budget ear-marks $86.5 million over three years to combat scam activity and online fraud, including $58 million in funding for the ACCC to move forward with establishing a new National Anti-Scam Centre (NASC).

What the NASC and what will it do?

The Assistant Treasurer described the new NASC as:

'the government’s primary weapon to detect, disrupt and deter scammers and tackle online fraud'.

Broadly, Mr Jones said that the new NASC, which is planned to be operational by 1 July 2023, will do three things:

  • 'use cutting‑edge technology to share intelligence across Government and with authorised industry participants to interrupt scams in real time;
  • combine the expertise of Government and the private sector to disrupt scams and;
  • raise consumer awareness on the risk of scams and how to avoid them'.

Of the $58 million in funding to establish the NASC, the bulk - $44 million – has been allocated to building the technology for the new centre to be able to support high frequency data sharing with a range of agencies, law enforcement and the private sector. This capability is set to be built over the next three years.

The remaining $14 million will be used to fund:

  • 'fusion cells' (ie groups of experts with experience/expertise across different sectors which will coordinate scam prevention efforts across government and the private sector)
  • education and communications activities in collaboration with the private sector
  • ongoing data analysis; intelligence gathering, and scam disruption work.

The ACCC has indicated that in the first year of operation, it's envisioned that the NASC will work closely with ASIC in delivery of its scam website takedown service as well as support the Australian Communications and Media Authority (ACMA) in combatting telecommunications scams.

Coordinating anti-scam efforts across industry sectors, digital platforms and government is identified as a key focus.

More is needed?

While welcoming of the various anti-scam measures being progressed, the ACCC's Deputy Chair Catriona Lowe commented:

'While these are all positive steps in the fight against scams, we also believe the work of the NASC would be greatly assisted by the establishment of effective cross-industry standards with coverage and teeth to ensure scammers can't exploit weak links'.

Separately, the Consumer Action Law Centre also welcomed the NASC announcement, but called for further action, including 'new laws that mandate industry action on scam prevention and impose liability for losses when they fail'.

A new cross-industry code on the way?

Reportedly (The AFR) the Assistant Treasurer has committed to the development of a mandatory cross-industry 'co-regulatory' Code by the ACCC over the next six months with a view to the Code being in place by the end of 2023.

ABA launches Fraud Reporting Exchange platform

The Australian Banking Association (ABA) has announced the launch of a new digital platform – the Fraud Reporting Exchange platform (FRX platform) – which aims to:

'enable faster and more targeted communication to help banks stop and recover as much money as possible when customers have paid scammers'.

For context, the ACCC has identified traditional bank transfers as one of the most commonly reported payment methods used by scammers.

According to the ABA's announcement, a trial of the new FRX platform showed that the time taken to resolve most scam cases fell by more than 50% - largely through streamlining communication.

Key features of the FRX platform, highlighted in the ABA's launch announcement, include the following:

  • 'Near real-time reporting of fraudulent transactions between member banks
  • The ability to, where possible, halt multiple fraudulent transactions taking place as part of the same scam
  • Shared intelligence between banks to assist with fraud and loss prevention efforts
  • A faster, more streamlined return of funds, where possible
  • Secure and tracked communications between member banks within the platform with agreed timeframes, reducing the need for multiple phone calls and emails between banks.'

A case of heeding ASIC's call?

The ABA's announcement follows the release of a report from ASIC in April 2023 (REP 761, summarised) into the big four banks' approach to scam activity. While acknowledging the work banks have put in to improving their approaches, the key message running through REP 761 is that ASIC considers banks 'can and should do more to protect Australians from the financial loss of scams', including improving their approach to scam detection and response. ASIC's REP 761 found that 'banks are detecting and stopping a low proportion of scam payments [the report put its at 13%]' with most consumers not recovering their funds.

ASIC's report also flagged that the regulator has commenced a review of the scam prevention, detection and response activities in other parts of the banking industry (that is, beyond the big four banks) and ASIC's intention to monitor the actions being taken by the big four banks in response to the issues identified in the report.

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