Written by Rob Tharle, Head of Product

Like many countries around the globe, Australia is in the grip of a fraud and scams epidemic. According to the ACCC Scam Watch stats, in 2022, $568m of losses was reported in over 239k reports (12.1% of which were associated with losses).  

Of these, investment scams were the stand out by value of reports, with phishing the most reported by volume. “Once we consider the fact that about a third of scam victims don’t report their losses, the real figure lost to scams in 2021 was well more than $2 billion.” 

None of this is helped, of course, by the high levels of data compromises in Australia such as Optus, Medibank, and more recently Latitude. Data compromises are key element in the overall fraud chain of scams. They provide a starting point for fraudsters with details that can be used for social engineering (phishing, vishing, smishing). This might be to immediately defraud or to enable further data capture ahead of a bigger fraud.  

Therefore, as in many other countries, there are now discussions about how to remedy this.  

What is Australia doing to combat scams? 

The Reducing Scam Calls Code and more recently its extension to cover scam SMS codes, requires telcos to trace, report and block these numbers. This is targeting a key part of the scams chain and this recent partnership goes further still  

Further targeting enablers, the ACCC has been working on measures and recommended a number in its recent call for new laws as laid out in a recent press release: 

The ACCC’s report recommends new laws that require digital platforms to: 

1. Provide user-friendly processes for reporting scams, harmful apps, and fake reviews, and to respond to such reports 

2. Reduce the risk of scams by verifying certain business users such as advertisers, app developers and merchants 

3. Publish review verification processes to provide important information to readers of online reviews to help them assess the reliability of reviews on the platform 

4. Report on scams, harmful apps and fake reviews on their services, and the measures taken to address them 

5. Ensure consumers and small businesses can access appropriate dispute resolution, supported by the establishment of a new digital platform ombuds scheme. 

Looking more at the financial services area, there is also growing support, but as yet no mandate, for a name checking service like UK’s Confirmation of Payee (COP) that helps reduce mandate redirection/false billing scams. 

Like other countries, Australia is in a discussion on how to combat these scams and who shoulders the liability. Like most of the world, in Australia, the liability still sites largely on the consumers. The UK as I’ve talked about here & here , bucks this trend as UK banks refund around half at present and will soon be forced to refund all, with a 50/50 split between paying and receiving banks. 

However, there is clear resistance to banks refunding victims of authorised frauds and scams. It is easy to see the argument; why should banks take the hit for these scams, when if the scam happened with cash the bank would not be.  It could also lead to an increase in fraudsters targeting Australia and could lead to increasing costs for all banking customers to pay for the refunds. 

As we see from the ACCCs points above. There also needs to be a discussion about how to share the burden of these liabilities with those firms who profit from enablement, telcos, social media and other such firms , as has been muted by UK Payments. 

So where next?  

Ultimately, all stakeholders across the economy need to do more than what is currently being done. Just expecting consumers to stop these is not working anywhere in the world. In all types of fraud the perpetrators keep on doing it if they keep getting the money. While all the firms that facilitate this, which includes the banks and payments firms, are not incentivised to stop it and this also goes for law enforcement, this will continue. 

These funds are used to support other criminal activities, such as investment in further scams, human trafficking including to help run scams, as well as arms and drugs. 

It is therefore important that all stakeholders play a part in reducing the funds that get to the bad guys and repatriating as much as possible to the victims. 

With a focus on reducing the level of losses and cases, by creating incentives on those best placed to combat this, which is clearly not consumers, is likely to lead to a reduction in scams and loses 

We need to do this to protect everyone and reverse the lack of trust in payments services this is engendering, to make good the real benefits of efficient real time rails after all the effort to create them. 

Globally, the size of the problem and type of scams and fraud show this is not just the naive and careless anymore, this is organised crime groups targeting all sections of the public to fraudulently obtain their money and assets. 

Download our fraud and investment scam report to learn more about how individuals fell victim to fake investment sites.