The federal government is promising to change the law to force banks to compensate Australian customers who are tricked into transferring money to scammers, accusing them of doing too little to prevent people from being duped out of more than $2bn every year.
Assistant treasurer Stephen Jones will tell the National Press Club on Wednesday that a government crackdown on scammers is having some success but that the corporate bystanders in the scam equation – the platforms that facilitate scammers’ contact and enable their financial transactions – should be doing more to stop them.
In a speech on Wednesday, Jones will say the law does too little to help victims get their money back, because bank customers are being duped into handing over money so the transfers themselves are not unlawful.
“A fundamental characteristic of scams is that they are transactions that are authorised – through deception – by the victim, so the law is not fit-for-purpose,” Jones will say, according to an advance copy of the speech seen by Guardian Australia.
“We will address this to ensure victims can receive compensation in the right circumstances,” Jones will say. “Compensation for inaction, for negligence, for failing to meet an obligation is a critical part of our framework.”
Government figures show Australians are losing less annually to scammers than they did two years ago, except on social media, where the situation is worsening.
“Scam losses originating on social media were up 17% in 2023,” Jones will say. “Scam reports were up 31% and the social media companies are dragging their heels.”
Jones will say the first phase of a suite of government anti-scam measures has helped reduce the losses by 13% last year from $3bn in 2022.
“There was still $2.74 billion lost and this is both tragic and excessive.”
During the pandemic, the cost of scams skyrocketed, with annual losses in Australia doubling in 2021 and again in 2022. Last year’s fall was the first since 2016.
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Half of all scams still occur via phone or text message and most involve a bank transfer.
Jones will vow to force companies to take more preventative action, labelling it “offensive” that digital platforms allow scammers to use their platforms freely.
“Digital platforms have a moral obligation to join the fight as part of their social licence,” Jones will say. “These are trillion-dollar corporations. They can afford to invest in a significant uplift to keep consumers safe. It’s really time for them to get on the side of consumers.”
Jones’ speech foreshadows a second stage of the government’s anti-scam measures, involving penalties for banks, telcos and digital platforms that don’t introduce preventative checks under new mandatory codes tailored to each sector.
For banks, this will include greater controls over bank transfers and an obligation to identify and close “mule” accounts.
“If there is a breach of the code, the bank, telco or digital platform will be held to account,” Jones will say.
“If they drop the ball, they will be liable to compensate the victim.”