Sophie Scamps (Mackellar, Independent) Share this | Hansard source

I rise today in support of the government's efforts to address the scourge of scams in this country, but I do so with significant concerns about the way they've approached the problem in this, the Scams Prevention Framework Bill 2024. The prevalence and pernicious impact of scams in this country mean that real, tangible effort to address them is urgent. Many other countries are forging ahead to protect their citizens. Australia is lagging behind and needs to do the same. The UK has set a strong precedent.

Let's have a look at the scams landscape in Australia so that we get a sense of the scale of the problem. Last year we lost $2.74 billion in this country to scams. That's more than $5,200 per minute, all day, every day, and that's only the scams we know about. People are invariably ashamed to discover they have been scammed, duped and fleeced, so many scam victims never report what has happened to them. Let's put those Australian losses in perspective. The $2.74 billion a year that we lose to scams is 18 per cent more than what the people of the UK lose to scams, and that number is not per capita; the UK has 2½ times Australia's population.

To the extent that there is a debate about scams regulation creating a honey pot—more on that a bit later—the fact is that we are already a honey pot for scams. It's hard to imagine how proper regulation could make it worse, and, despite what the big banks would have you believe, they are not doing nearly enough to prevent scams taking hold.

It's also important to point out that, when we talk about scams, we're not talking about fraud. Fraud is when a third party steals your identity or your credit card and steals from you without your knowledge. That loss is not included in the figures I've just mentioned, and, more importantly, as many of us know, is typically reimbursed by financial institutions. A scam is when we ourselves authorise a transaction—give our money away—but under false pretences, to scammers who have promised a reward, an investment return or something similar. It's more complicated when you yourself have handed over your own money, and it's more embarrassing and more traumatising for the victim. Like the scourge of domestic violence in this country, no-one is too well off, too educated or too sophisticated to be safe from falling victim to a scam. My community is, appropriately, very concerned about it.

Since I was elected, I've been contacted by many constituents who have been the victim of absolutely terrible scams or have had loved ones who have been. Everybody knows someone who has been a victim. And it's not just the victim of the scam that is impacted; entire families are affected, particularly when life-changing amounts of money are lost. To respond to that concern, I've partnered with Scamwatch to host community information sessions on scam prevention. Scamwatch is the Australian government initiative designed to help consumers stay one step ahead of the scammers. Recently I held a webinar with Stephanie Tonkin, the CEO of the Consumer Action Law Centre, to help equip my constituents with the information they need to best protect themselves. These sessions were indeed very popular, and the stories of the scams that people had fallen prey to were alarming, to say the least.

One constituent wrote to me about her 93-year-old mother being scammed. It was only after a serious car accident, fearing that she might die, that her mother admitted to having been scammed. The scam involved direct phone calls to her mother from people purporting to be from the Federal Police and from her bank, and the scam played out over several months. The scammers managed to convince her that the only way she could keep her savings secure was to move her money around to other accounts by buying gift cards, sending cheques to various places and making large transfers to unknown people. They used every trick in the book. The scammers took advantage of her age and her vulnerability; her trust in authority, typical of that generation; and her lack of computer skills. In the end, this scam involved six financial institutions and resulted in my constituent's mother losing $800,000. Six financial institutions were involved.

Due to my constituent's diligence in pursuing this matter over 18 months, around $150,000 of that money that was scammed away was recovered. But recovering even this portion of the money has been exhausting work for her. In her experience, the position of the majority of the financial institutions was to blame the victim, implying negligence or carelessness. It was not that she was preyed upon by fraudsters or that the bank ought to have done so much more to protect her, a vulnerable customer. The banking institutions are privy to a vast amount of information that we the public do not have access to. The constituent who wrote to me could not have summed up the position any better:

Banks in Australia are institutions of immense wealth and status. They exercise a very powerful role in our society …

It follows … that community expectation is for the highest standards of professionalism. To me, this would extend to exceeding minimum standards which are seemingly no longer fit for purpose, and crucially being proactive in responding to changing circumstances, in particular to the increased occurrence and destructive effects of scams, as well as being responsive to the needs and vulnerabilities of elderly customers, by ensuring the most effective, best-designed systems of protection are in place.

ACCC deputy chair Catriona Lowe said that their data indicates that scammers are targeting older Australians with retirement savings who might be looking for investment opportunities. So I am disappointed by the path the government has chosen to take to address this devastating issue, as the consumer—the victim—has been sidelined and neglected in this piece of legislation. The main argument that has been offered by the government to reject the reimbursement model is the honey pot, or moral hazard, argument. The argument goes that, if financial or other designated institutions automatically reimburse victims, then victims would take less care with their investments, knowing the reimbursement was guaranteed. The scams market would open right up, and scammers would flock here.

Australia is already the honey pot. As I mentioned earlier, Australians lose 18 per cent more to scammers than people in the UK do, and that is not taking into account the fact that their population is 2.5 times larger than ours. In 2022, in Australia, only 13 per cent of attempted scam payments were stopped by the banks before they occurred. Once completed, only two to five per cent of scams victims were reimbursed for their losses—a miniscule amount. In the UK, by contrast, the top four banks pay out 49 to 73 per cent of losses, and those statistics come from before the UK introduced an automatic reimbursement scheme. This is from when it was still voluntary.

Where is the evidence that Australia will become a honey pot? We have been shown none. The impact analysis in the explanatory memorandum of the bill states:

The core objectives of the government's policy response would be to both reduce scam harms and align the benefits and costs of scam prevention.

It goes on to say that Treasury has considered two options as part of that policy response. Option 1 is 'maintain the status quo'. In other words, do nothing. How is this considered a policy option robust enough to include in an explanatory memorandum for a bill of this kind? It is absolutely confounding. Option 2 is 'establish the Scams Prevention Framework'. This is just weird. In other words, the government considered no other alternatives to the option they settled on. They did not analyse scam prevention systems established in other, similar countries. Specifically, they did not adequately consider an automatic reimbursement model as has already been implemented in the UK. In fact, the only reference to the UK's reimbursement model in the explanatory memorandum is to reject, in two sentences, the strong joint recommendation of the Consumer Action Law Centre, CHOICE and the Australian Communications Consumer Action Network. Their call was to mirror the UK's reimbursement framework here in Australia.

In rejecting that proposal, the government states that it would, and I paraphrase, place a presumption of liability for scams losses onto one sector—that is, the banks—with minimal incentives for other sectors, such as telecommunications and digital platforms, to accept liability for not meeting their obligations. Let's break that down for a moment. In one breath, the government has rejected the recommendations of the peak consumer bodies in this country, because the banks would be negatively impacted, more so than the telcos or the tech companies. But where, in this analysis, is the consumer? Where is the victim? Where is the policy objective, let alone the policy response, of reimbursing what could be the loss of a victim's entire life savings? It leaves the victim in the position of having to potentially fight multiple financial institutions, telcos and social media companies for reimbursement. Talk about an uneven playing field. Furthermore, the peak bodies have quite rightly pointed out that the apportionment of liability between banks, telcos and social media companies could easily be done another way: among themselves, based on precedent, after the victim has been reimbursed. Why should the victim be further punished by having to wait months and often years for reimbursement?

The constituent whose story I described earlier urged me to call on the government to adopt the recommendations of the Consumer Action Law Centre, CHOICE and the Australian Communications Consumer Action Network to implement a reimbursement model. I'm here to do so. She shared her story with me, and I share it in this place to lend support to ensuring a world-leading, highly effective, consumer-protecting scams prevention framework is legislated.

Debate adjourned.

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