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In Competition

Scammed at First Sight?

13 February 2024

This Valentine’s Day, the Australian Competition and Consumer Commission (ACCC) warns that scams are in the air. This warning comes as the Australian government wraps up a consultation process for a mandatory industry code to combat scams.

During Scams Awareness Week last year, we wrote about the Australian Securities and Investments Commission (ASIC)’s new ‘scams takedown’ capability and the establishment of the National Anti-Scams Centre (NASC). To recap, NASC was established by the ACCC on 1 July 2023 to coordinate government, law enforcement and the private sector to combat scams. NASC runs the ACCC’s Scamwatch service, which collects reports about scams.

In this post, we delve further into the ACCC’s warning to consumers against online scams, and a proposed model for regulators including the ACCC, ASIC and the Australian Communications and Media Authority (ACMA) to enforce mandatory obligations for businesses to manage scams.

I can’t help falling…for the scam

Scamwatch recently reported that it received 484 reports of romance-baiting scams in 2023, resulting in losses of more than $40 million.

Romance-baiting scams typically involve a scammer meeting a victim through a dating app, building a romantic relationship and then convincing the victim to invest money or buy cryptocurrency. It may initially appear to the victim that they are making a profit from their investment, but once the victim has no more money or refuses to keep investing, the scammer may disappear. The victim is left with both financial loss and significant emotional harm from what they perceived to be a romantic relationship.

In the ACCC’s recent warning about scams, ACCC Deputy Chair Catriona Lowe said that:

While the decline in annual losses indicates that co-ordination between government and industry is increasing community awareness and disrupting scammers, we are concerned that people are still losing an alarming amount of money to romance baiting scams. Online dating and social media connection is a common way to meet new people, but it also presents an opportunity for scammers to deceive people and take advantage of their trust. We are working closely with law enforcement to combat these scams and protect the public.

Don’t go breaking my bank

To prevent romance-baiting scams, the ACCC recommends using the ‘Stop, Think, Protect’ method:

  • STOP communicating with someone you’ve met online if you have doubts about whether their romantic intention is real – in particular, don’t share your personal information or act on their investment advice.
  • THINK about whether you are aware of the identity of the person you’re engaging with. For example, do an internet search of the person’s name or photo to see if the person is lying about who they really are.
  • PROTECT yourself. If something does not feel right, contact your bank immediately (if you have made an investment via that person). You can also assist others by reporting your experiences to Scamwatch.

Earlier this year, the ACCC also advised consumers to use the ‘Stop, Think, Protect’ strategy when looking to secure last minute Taylor Swift concert tickets, making sure Swifties can Shake It Off without a Blank Space in their wallets.

All’s fair in love and (the) war (on scams)

The Treasury and the Department of Infrastructure, Transport, Regional Development, Communications and the Arts are proposing new industry codes to prevent scams.

The ‘Scams – Mandatory Industry Codes’ consultation paper was in November 2023. It outlines a proposed ‘Scams Code Framework’ to impose responsibilities on the private sector in relation to scam activity. The closing date for submissions was 29 January 2024.

The Scams Code Framework is proposed to be a regime under the Competition and Consumer Act 2010 (Cth) (CCA) with mandatory obligations for businesses in ‘designated sectors’.

The Scams Code Framework initially proposes to designate banks, digital platforms and telecommunications providers, as the sectors that can do the most to prevent scams. However, there is scope for the relevant Minister to designate future sectors such as superannuation, digital currency exchanges (i.e. cryptocurrency), other payment providers, and transaction-based digital platforms like online marketplaces. There is also scope for government or regulators (including ASIC, ACMA and the ACCC) to develop sector-specific codes and standards.

Under the Scams Code Framework, businesses may be subject to broad obligations such as:

  • Having an anti-scam strategy, preventing misuse of services by scammers, implementing anti-scam systems, providing consumers with information about scams and training staff to identify and respond to scams.
  • Detecting, blocking and preventing scams, verifying and tracing scams, acting in a timely manner on scam intelligence, disclosing scams to consumers, and providing consumers with tools to verify information in real time.
  • Taking all reasonable steps to prevent further loss to consumers, providing consumers with options to report scams, implementing complaints handling processes, and providing consumers with access to information about dispute resolution options where applicable.
  • Reporting and information sharing with other businesses, designated industry bodies, law enforcement and regulators, and the NASC.
  • Record-keeping obligations, and an obligation to respond to information requests from the ACCC.

These broad obligations are proposed to be required in addition to potential sector-specific obligations. For example, proposed obligations on banks include the implementation of processes to assist consumers in tracing and recovering transferred funds.

Importantly, the consultation paper proposes that if a regulated business fails to comply with their obligations under the Scams Code Framework, penalties for non-compliance may apply under the CCA and/or under sector-specific enabling legislation.

Have scammers come to the end of the road?

With the Scams Code Framework proposal, the Australian government is taking a clear step towards placing the burden on businesses to help fight scams. However, the ACCC has consistently been issuing warnings to consumers on how to remain vigilant and protect themselves from scams. Both businesses and consumers should take heed.

By Jacqueline Ibrahim and Zareen Qayyum

Valentines Chocolates by Stewart Butterfield / Wikimedia Commons / Creative Commons Attribution 2.0 Generic / Remixed to B&W and resized

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