Combatting scams a key priority for regulators and government
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.
Enforcing e-marketing unsubscribe rules and combatting SMS scams is also included among the Australian Communications and Media Authority's top priorities in 2023-24.
As flagged above, the issue is also a focus for government, with the latest Federal Budget including significant funding to address the issue, including funding to establish the new National Anti-Scam Centre (NASC) within the ACCC.
About the NASC
For context, the Assistant Treasurer has previously 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, is expected to 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 [through the planned establishment of a series of time-limited expert taskforces or 'fusion cells'] and;
- raise consumer awareness on the risk of scams and how to avoid them'.
In its first year of activity, 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 also identified as a key focus.
First 'fusion cell' to target investment scams
Assistant Treasurer Stephen Jones describes a 'fusion cell' as:
'an expert taskforce from across government, law enforcement, and the private sector who will utilise their expertise and intelligence to disrupt a specific scam'.
As flagged, across all scam categories, investment scams have been identified by the ACCC as causing the highest losses to consumers. For this reason, targeting this category of scam has been chosen as the first target of the first 'fusion cell'.
Specifically, the investment scams taskforce has been tasked with focussing on:
- 'Early intervention to disrupt investment scams including stopping scammers from reaching potential victims
- Removing investment scam websites from the internet
- Sharing information about investment scam activity to assist the private sector to take disruption action
- Providing information to the public so they can avoid investment scams
- Identifying intelligence to refer to law enforcement in Australia and overseas'.
This 'fusion cell' will be led by ASIC and the ACCC and is also planned to include 'representatives from banks, telecommunications companies and digital platforms'. Exactly how large the taskforce is/who will participate has not been confirmed – the regulators have indicated that membership is intentionally variable and flexible. ACCC Chair Catriona Lowe has said that that the taskforce will include:
'exactly no more and no less than the experts we need around the table to solve the problem. It will vary depending on the nature of the intervention that we're undertaking… so we'll have an initial grouping, but we will be open to adding expertise that are going to help us target the problem. We've got an open mind about how we solve this problem. That's the nature of a fusion cell – it will be agile, depending on what we identify as the best techniques to interrupt the scams.'.
The investment scams fusion cell is planned to be in place initially for six months and is expected to report publicly on outcomes through the NASC.
Other planned measures: New Industry Codes of Practice
The Assistant Treasurer also flagged plans to introduce 'over the next few months' new industry Codes of Practice for 'banks and other financial institutions', telecommunications companies and social media platforms to push industry to lift standards. Mr Jones stated:
'We're going to lift the bar to ensure that there are new obligations upon banks and other finance institutions to ensure that they are doing their bit to help Australians – households and small businesses – take the fight up to scammers. New obligations to ensure that there's a higher standard across our banks, higher standards in our telecommunications companies and higher standards with social media platforms as well'.
The banking sector is also taking steps
As flagged previously, following the release of a report from ASIC (REP 761, summarised) into the big four banks' approach to scam activity the banking sector is taking some steps to respond.
The Australian Banking Association (ABA) recently 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'.
Responding directly to the announcement of the new investment scams 'fusion cell' the ABA has welcomed the 'strong cross industry representation' in the first fusion cell observing that cooperation between industry and government and between industry sectors is 'essential' in disrupting what are increasingly sophisticated and complex scams.
ASIC has reiterated its call for banks to improve their approach
A 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.
Appearing at the joint press conference to announce the new investment scam taskforce, ASIC Commissioner Danielle Press reiterated ASIC's previous calls for banks to 'do better, to improve their approaches and to deal with scams'. Commissioner Press also took the opportunity to call on the private sector more broadly to cooperate in addressing the issue, underlining that ASIC considers combatting scam activity to be 'a critical task for all of corporate Australia, including financial institutions, technology companies, digital platforms and other organisations'.
[Sources: ACCC media release 03/07/2023; ASIC media release 03/07/2023; Assistant Treasurer Stephen Jones media release 03/07/2023]
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