New Australian Law Makes Banks, Telecoms Liable for Scams

The Australian government passed the Scams Prevention Framework law in Parliament to make social media companies, banks and telecommunication companies accountable for scammers using their networks, subjecting them to a maximum of AU$50 million in fines for violations.

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The government said it enacted the “world’s toughest anti-scam laws” to make it virtually impossible for scammers to reach Australian residents, while making it easier for victims to claim compensation for financial losses.

The Scams Prevention Framework Bill, which passed both houses of Parliament Thursday, lays down specific duties and responsibilities for banks, telecommunication companies and digital platforms to ensure that their networks are not abused by malicious actors for online or telephone scams.

While social media platforms are now required to verify advertisers on their platforms to stop fake ads, banks are required to confirm the identity of payees to make it easy for people to know where their money went.

The new law also requires telecommunication companies to detect and disrupt scam numbers that are used to send malicious texts and calls to Australian residents. Entities that fail to meet the obligations may face up to AU$50 million in fines or become liable to compensate victims for their losses.

The prime minister’s office announced in November that the scam prevention framework bill was in the works, stating that it planned to introduce mandatory requirements to make banks, digital platforms and telecommunication companies accountable for scam activity that exploited their platforms and services.

The Treasury department estimated that the three designated sectors will spend about AU$102 million annually over the first 10 years to comply with the Scams Prevention Framework.

The prime minister’s announcement followed a report from the National Anti-Scam Center that found Australian residents reported over 601,000 scams in 2023, losing AU$2.74 billion to fraudsters. The overall number of scams grew by 18.3% over the previous year, even though victim losses fell marginally from AU$3.15 billion in 2022.

The Australian Financial Complaints Authority, designated under the new law as the dedicated external dispute resolution authority for scam-related complaints, said the law will introduce a mandatory intelligence-sharing system to ensure timely reporting and collaboration across industry and government.

“Although the new government framework is not expected to launch until 2026, AFCA will actively work with government, regulators, consumer groups and the industries involved to help deliver this important reform,” AFCA said. “We will use our experience and insights to contribute to the development of new codes, and to support firms to develop and enhance their own dispute resolution processes, which are the first point of contact for people with a complaint.”

The banking industry has also welcomed the new legislation. Australian Banking Association CEO Anna Bligh said banks will play a leading role to ensure digital platforms and telecommunication vendors will have strong safeguards in place to prevent scams from reaching customers.

“Australian banks will be held to account for the actions they are taking to protect customers. Banks are ramping up anti-scam measures through our industry’s Scam-Safe Accord,” Bligh said. “Scam losses are down by 33%; however, there is still more work to be done to drive them down even further. We now have the legislative foundation to stay one step ahead of scammers and drive them out of Australia.”