Banks, Social Media, Telcos to Be Held Financially Accountable for Scam Losses

Even though fewer and fewer people use checks, scams are on the rise. (Oriana Zhang/The Epoch Times)

Banks, social media platforms, and telecommunications companies will soon be held financially accountable for scam-related losses incurred by consumers if they are found responsible, under new government regulations.

In an address at the National Press Club on July 31, Assistant Treasurer Stephen Jones announced the government’s plan to implement codes that will enforce stricter obligations on all stakeholders—banks, telecommunications companies, and social media platforms—to assist consumers.

“If they drop the ball and a victim loses money, they'll be liable to compensate the victim,” Jones said.

“That liability may be shared among multiple businesses, as scams often involve more than one bank or payment system.

“They may also involve a telecommunications company or a social media platform, and often involve all of these. All businesses that benefit from the digital economy have a role in protecting consumers.”

He further announced that this year the government is investing over $67 million in the “war on scams,” with the centerpiece being the introduction of a scams code framework and new mandatory industry codes.

“We'll start with the three sectors in the ecosystem I’ve mentioned: banks, telcos, and digital platforms,” Jones said, explaining that these codes will be legislated and enforceable.

“Each sector will be required to implement measures to address vulnerabilities and enhance responses within the ecosystem,” he added.

For example, the new code will require banks to strengthen controls around bank transfers, targeting the most common payment method for scams.

Banks will also be responsible for reporting and responding to scams, and will need systems to identify suspicious payments and accounts, taking action to protect their members.

Telecommunications companies will be required to block known scammers and provide intelligence to the rest of the ecosystem.

Social media platforms will need to implement stronger anti-scam measures, including verifying the identity of advertisers and removing scam pages, while ensuring clear support pathways for victims.

The code will also impose obligations on businesses to assist their customers directly with complaints, backed by an independent external process with consequences.

“If there’s a breach of the code, then the bank, telecommunications company, or digital platform will be held accountable,” Jones said.

‘Real-time Intelligence is Crucial’

Further, Jones emphasised the need for intelligence sharing among stakeholders as a preventive measure.

“We need to move as quickly as the scammers, which requires a significant improvement in how we share information between key institutions,” he said.

“Real-time intelligence sharing with banks, social media platforms, and regulators is crucial because scammers do not selectively target; they attack hundreds, if not millions, of Australians.

“Effective information sharing across pillars and breaking down silos within the ecosystem is essential. This will enable comprehensive responses and protections. The anti-scam strategy will also improve support for victims, with ongoing work in this area.”

Cracking down on social media platforms, Jones noted that scam losses originating on social media platforms increased by 17 percent in 2023, while scam reports rose by 31 percent.

“I believe it is a serious issue that digital platforms allow scammers to use their networks to target victims,” he said.

“It’s offensive that they profit while doing so. Digital platforms have a moral obligation to contribute to the fight against scams as part of their social license.

“These businesses, worth trillions of dollars, can afford to invest more in protections to keep consumers safe.”

Australian Banking Association Urges Shared Responsibility for Scam Losses

Meanwhile, the Australian Banking Association (ABA) has questioned whether banks should be solely responsible for compensating customers in cases where scams originate from other sources, such as telcos or social media platforms.

“If a customer directs the bank to make a payment, banks are legally required to comply,” ABA’s CEO Anna Bligh said.

“Banks can delay, try to talk to customers, and prevent it, but they are not the final judge.

“If a customer has lost money through a scam where they directed the bank to make the payment, they can take their complaint to a free financial complaints authority. If the authority deems the bank liable, it will direct the bank to make a full payment. This system is fair.”

Bligh acknowledged that scams often originate from telcos or other platforms.

“Scams usually start on your phone, laptop, or through an SMS or search engine,” Bligh said.

“We need a systemic approach to break the scamming chain.”

While optimistic about future technological solutions to prevent the impersonation of banks and other organisations, Bligh advised customers to remain vigilant, stressing that banks will never ask customers to transfer funds over the phone.

“If someone claims to be from your bank’s fraud department and asks you to transfer money, they are a scammer. Hang up,” she said.

The Albanese government has prioritised the fight against scams as an election commitment, setting aside over $86 million in the 2023 budget.