Experts say Albanese’s proposed telco and bank scam compensation scheme places ‘burden’ on victims

The Albanese Government has proposed a new compensation scheme for victims of banking, telecommunications and social media scams, with hopes it will be legislated by the end of this year.

But while experts say pathways for redress do need to be paved, overly complex draft laws would place a “burden” on victims trying to get their money back.

The scam compensation plan is just one of several measures, such as the introduction of mandatory industry codes, included in the Scams Prevention Framework (SPF) released for public consultation last month.

Internal Dispute Resolution (IDR) would be mandatory for relevant regulated entities, meaning the ACCC would have the power to issue fines of up to $50 million under the Consumer and Competition Act (CCA) for failing to protect Australians from scammers.

A single External Dispute Resolution (EDR) for redress, where the entity has done the wrong thing, would also be established, and would be operated by the Australian Financial Complaints Authority (AFCA).

The hope is that by placing the onus on businesses, they would be forced to stop scams at the source by implementing internal measures, including preventing fraudulent advertisements from being placed on their sites.

“The focus of our new law is prevention — stopping the losses before they occur,” Minister for Financial Services Stephen Jones told 7NEWS.com.au.

“We will do this by placing new obligations on companies to protect their customers. Liability, and compensation, arises when there is a breach of obligation.

“The law will establish new dispute resolution pathways where currently there are none. It will create new grounds for compensation where currently there are few.

“Once the framework is legislated, Australia will have the toughest prevention system in the world.”

A ’burden’ on the victim

The SPF was welcomed at the time of its introduction by the Australian Banking Association, which noted that a collective approach from both government and private enterprise is needed to win the war against scammers.

“That means ensuring telcos and the social media platforms have strong protections in place to stop scams reaching Australians,” ABA chief executive Anna Bligh said.

But Financial Rights Legal Centre senior policy and Advocacy officer Drew MacRae told 7ENWS.com.au that he believes the framework does not put victims first.

“Urgent action is required to establish an effective consumer protection framework that prevents, detects, disrupts and responds to scams and addresses the harms being done, in a response that places the consumer at the heart of the framework,” he said.

“The Scams Prevention Framework (SPF) as proposed fails to do this.

“While we welcome the government acting on the multi-billion-dollar scam problem, the SPF places the burden of a responding to a scam, which often robs a person of life-changing amounts, onto the victim.“

No time to simplify, minister says

MacRae said the complexity of the redress scheme proposal could easily be simplified to centre victims.

“The dispute resolution model proposed is incredibly complex, time-consuming and leaves scam victims fighting for compensation against multiple banks, telcos and digital platforms.

“It is stacked against the consumer.

“Instead, this process could be simplified to a uniquely Australian Reimbursement Model where a consumer is reimbursed by their bank quickly and the bank then apportions loss across industry.”

But Jones said there is no time to waste in terms of getting the framework legislated.

“It would be a tragedy if politics got in the way of introducing these new protections. The Government will be seeking bipartisanship on this. It’s in the national interest,” he said.