Announcement Date
7 November 2024
Link to Announcement
Scams Prevention Framework Bill 2024 – Parliament of Australia
Problem Being Addressed
Scams are a significant source of financial crime that inflict unacceptably high levels of harm to Australian consumers and industry. Scams target a wide range of people by exploiting the social and technological vulnerabilities in the way Australians interact and do business online. Scams are often linked to other crimes, including identity theft and cybercrime.
Scams are attempts, directly or indirectly, to deceive a consumer into obtaining financial benefits or personal information. Scams can be carried out through a wide range of communication channels, including phone, text message, social media, and email.
Current industry initiatives lack a coordinated cross-sector approach to protect Australians from scams. Without government action, industries providing services that are vectors of scam activity are unlikely to be sufficiently incentivised and coordinated to respond to the rising cost of harms from scams.
Proposal
In response to the rising impact of scams, the Government made an election commitment to introduce tough, new mandatory industry codes for banks, telecommunication providers and social media companies to combat scams.
The Impact Analysis (IA) considered two options.
Option 1: Maintain the status quo.
Option 2: Introduce new mandatory industry codes (initially applying to banks, telecommunications providers and certain digital platforms) to outline the responsibilities of the private sector in relation to scam activity under an overarching Scams Prevention Framework. If the entities in these industries fail to comply with their obligations, they may be subject to penalties or be liable to compensate consumers for losses experienced due to these failures.
A new framework that creates mandatory obligations for sectors targeted by scammers would provide appropriate guardrails to reduce the scam threat activity across key sectors and make Australia a less attractive target for scammers.
Assessed Impact Analysis Outcome
Good practice
Assessment Comments
The IA addresses the seven IA questions and follows an appropriate policy development process commensurate with the significance of the problem and magnitude of the proposed intervention. In particular, the IA presented the problem well and was effective in its structured approach.
Regulatory Burden
The Treasury estimates on average over the first 10 years industry would be expected to incur $102.1 million in annual regulatory costs across the three sectors designated under the Scams Prevention Framework.