Telcos, social media warns scam laws a step into the unknown

Consumer and technology industry groups have blasted the Federal Government’s planned online scam laws amid fears they are ambiguous and could make it tougher for victims to pursue compensation.

The lobby group for the big social media players — including Facebook, Google and X — claim that Australian banks have enjoyed far greater influence than technology players in developing the proposed new regime.

The Senate could next vote on the contentious legislation, rushed through the House of Representatives in November, creating a legal framework for victims to seek restitution from banks, telecommunications providers and the social media giants.

The industry-funded Australian Financial Complaints Authority will be the official umpire for the flagged new disputes resolution regime, which will be linked to a variety of industry codes and regulations.

Customer protection groups warned at an urgent Senate economics committee hearing on Tuesday that the new system could be beyond most victims because it would allow for appeals to the Federal Court.

Consumer Law Action Centre chief Stephanie Tonkin said such appeals were unprecedented in the type of external disputes resolution process flagged in the legislation.

“Given the deep-pocketed multinationals’ immense power in dispute resolution, they can just challenge a decision in a jurisdiction victims can’t afford to defend,” Ms Tonkin said.

Unlike UK anti-scam laws that are focused on banks compensating burnt customers, Australia’s proposed regime spreads potential responsibility between banks, telecommunications companies and digital platform operators.

Lobby groups for telecommunications and digital technology companies claim the proposed laws fail to clearly outline the obligations of industry players.

Pointing to documents obtained from Treasury under freedom of information laws, lobby group Digi claims the once-secret rules shows the Federal Government had lobbied the Australian Banking Association since 2022 on the anti-scam laws.

“The same level of consultation has not occurred with other regulated industries,” Digi said.

Digi chief Sunita Bose said the documents indicated Treasury officials had recommended a scheme built around a mechanism to reimburse victims where banks had breached their obligations.

“What’s being proposed here is a departure from the direction of other jurisdictions such as the UK and what’s been proposed in Singapore,” Ms Bose said.

Digi’s submission to the Senate hearing included 134 pages of heavily redacted Treasury ministerial advice that is critical of the Australia banking sector’s outdated BSB money transfer system that requires only account numbers and not verified names.

“This facilitates scam payments where the account name provided by the scammer differs from the real account name, and occurs in email compromise scams and some investment scams,” Treasury said.

Recommending a system focused on banks, Treasury said developing and implementing a multi-sector dispute resolution scheme “would be complex and time-consuming, and would be a future consideration”.

Ms Bose said many of the obligations in the proposed laws were “quite unclear” and it was hard for industries to work out what obligations would arise from a variety of regulations and codes affecting the different sectors.

“Industry is uncertain about this — consumers will be uncertain too,” she said.

“My concern is that these obligations aren’t as clear and targeted and effective as they can be.”

Representing telecommunications players such as Telstra and Optus, lobby group Communications Alliance claimed the legislation did not sufficiently detail the obligations of various sectors.

Alliance deputy chief Luke Gillespie warned telcos could be overzealous in blocking text messages and other communications if there was ongoing uncertainty about their obligations.

“There’s going to be a bias towards blocking that traffic, even if it is legitimate,” he said.

“That is a very dangerous position for this legislation to put the sector into. And I don’t think it’s ultimately good for Australians to be at risk of missing out on legitimate traffic.”

But Mr Gillespie’s deputy Christiana Gillespie-Jones agreed with a suggestion by a Labor senator that her group could work with the Australian Communications Media Authorities on developing a code to help “maximise the traffic we legitimately block”.