News

Consumer organisations fighting to ensure Australians are protected under the Scams Prevention Framework Bill will provide evidence today at a crucial Senate Economics Legislation Committee hearing.

In its joint submission to Committee, consumer sector organisations call out the unfair burden the Bill imposes on scam victims and insist that dispute resolution would only work with a key change to make compensation more accessible. A ‘presumption of compensation’ for a breach of the obligations would provide a far simpler and effective dispute resolution system for scam victims.

Consumer Action Law Centre CEO, Stephanie Tonkin said while real progress has been made, the Bill is still heavily weighted towards prevention and reducing the burden on business, rather than responding to consumers’ needs.

“Consumers cannot be expected to take a leap of faith and stake their life savings on the chance that these thin laws will fairly assist them,” Ms Tonkin said.

“Our extensive frontline experience and listening to clients’ stories, tell us that the victim blaming narrative and combative approach by banks towards people who have been scammed will not change under these laws.

“We need more consumer centred guardrails, primarily a presumption of compensation, from the outset. There’s no guarantee such protections will be placed in the Codes if they are not in the Bill. There’s too much at stake to get this law fundamentally wrong,” Ms Tonkin said.

The consumer advocates submission expresses support for the amendments moved by several crossbenchers to strengthen the Bill, including improving and passing a certification amendment moved by Ms Zali Steggall MP, which would require businesses to certify their compliance with the Framework. The other amendments proposed by Ms Allegra Spender MP and Dr Sophie Scamps MP seek to improve the reporting aspects of the framework and put a consideration for vulnerable consumers in the Bill.

While the submission acknowledges the good parts of the Bill, it also warns of the onerous task scam victims will face to obtain redress under the proposed Framework.

“The Assistant Treasurer has stated that businesses will compensate scam victims when they fail to meet their ‘high bar’ obligations under the Framework – but this isn’t what is written in the Bill. Instead, the Bill places the unrealistic burden on victims to gather evidence and prove how each business failed to protect them from a scam, and how this caused their loss,” Ms Tonkin said

“We thank the Government for its willingness to constructively talk to the consumer sector and listen to the stories from our clients and people who have been harmed by scams, but this shouldn’t mean consumers should lose out at the last hurrah.

“While the Framework isn’t the full reimbursement model we have called for, the harm to victims means we need some laws passed urgently. We will continue working with Government and others to make this Bill and scam protections as strong as possible. It has taken a long to time to get to this stage and we believe that if the presumption of compensation is included, the Framework can work to provide fairer outcomes for scam victims and drive industry action to prevent scams.”

Other key recommendations in the submission include preserving existing rights or protections, including those under the ePayments Code, and providing fair principles for apportioning liability for breaches of the Framework where scam victims are compensated 100% or ‘made whole and not left carrying any of the losses.

Quotes attributable to: 

Carol Bennett, CEO, Australian Consumer Communications Action Network 

“Making the companies looking after our money and our transactions accountable for losing our money is the best way to reduce scams as has been shown in other countries including the UK where over 95% of scammed money is now returned to the customer by banks and other companies, and the number of reported scams is decreasing. In Australia, less than 10% of scammed or fraudulently obtained funds are returned to consumers and scams are increasing.

“The big banks and other major companies have the capacity to take on the international fraudsters running scams, it’s time they were given a real incentive to do so as they are in other countries.”

Roberta Grealish, Principal Solicitor, Consumer Credit Legal Service Western Australia (CCLSWA) 

“The case work we undertake at CCLS for victims of scams is extremely complex and it takes a long time to achieve an outcome. It is not unusual for our scam cases to run for over twelve months while we navigate bank’s internal dispute resolution, with matters often escalating to AFCA.  This is too long for victims to endure the financial and emotional toll of the scam while they wait for compensation. A ‘presumption of compensation’ in the Bill is imperative to reduce this burden on victims and ensure an effective and efficient dispute resolution system.”

Read the joint consumer organisation’s submission here. 

ENDS