Australian Government Proposes AU$50M Fines For Banks, Tech Firms Over Failure To Prevent Scams

The Australian government is planning to introduce a new legislation that will make banks, telcos and tech companies liable to pay compensation to customers and face fines of up to AU$50 million if they failed to prevent scams.

Releasing the draft legislation on Thursday, Minister for Financial Services Stephen Jones said, "We want to ensure that the best protections anywhere in the world are available."

As the current measures are inadequate, according to Jones, the new code will include rules to detect, prevent and respond to scams, and apply to tech giants like Google, TikTok and Facebook if they allow scams to flourish on their platforms, ABC News reported.

"I'm not going to let the social media platforms off the hook," he said. "If they're taking money to advertise scam content and somebody loses money as a result of that, then there has to be a consequence."

Under the new draft, the role of Australian Financial Complaints Authority (AFCA) has been expanded, giving access to victims, who can seek compensation from the digital platform, telco, or the bank.

Tech giant Google reacted to the draft, saying it was neither realistic nor feasible.

"The framework could therefore open Google up to a huge number of claims for compensation from individuals where Google cannot realistically control its exposure," it said.

Rejecting the argument, Jones stated that the new rules will be included in the social license for the tech companies.

In July, the tech companies, X, Google, Meta, TikTok and others signed a code, aimed at combating scams by blocking, reporting and removing the scam content.

Data by the Australian Competition and Consumer Commission revealed that in 2023, 601,000 scams were reported, which was a rise of 18.5% from the previous year, costing the victims AU$2.74 billion.

Though the victims can approach AFCA for redressal, the code does not explain how they will be reimbursed, reported The Guardian.

Under the reforms, banks have to stop the payment and inform the authorities of the scam. The bank will also be responsible for identifying and closing money mule accounts, through which scam transactions were made, usually offshore.

Welcoming the draft laws, Australian Banking Association's chief executive, Anna Bligh said a collective effort was required to defeat the scammers.

"These codes must address the core problem of people being exposed to scams in the first place. That means ensuring telcos and the social media platforms have strong protections in place to stop scams reaching Australians."