Labor's Plan to Hold Banks Accountable for Scam Victims

In a significant move to combat financial scams, the Australian federal government is set to introduce legislation requiring banks to compensate customers who fall victim to scams. This announcement comes amid growing concerns that banks are not doing enough to protect customers from losing over $2 billion annually to fraudulent schemes. In a speech scheduled for Wednesday, Minister for Financial Services, Jones, will highlight the inadequacies of current laws, which fail to recognize that victims often authorize transactions under false pretenses. Jones will emphasize that the existing legal framework is outdated, stating, “A fundamental characteristic of scams is that they are transactions that are authorised – through deception – by the victim.” He argues that the law must evolve to ensure victims can recover their losses, particularly in light of a 17% increase in scam losses originating from social media in 2023. Despite a recent government initiative that reduced scam losses by 13% from $3 billion in 2022, the total losses remain alarmingly high at $2.74 billion. The Minister will also call on digital platforms to take greater responsibility in preventing scams, labeling it “offensive” that these companies allow scammers to operate freely. He insists that major corporations have a moral obligation to enhance consumer safety and should invest in protective measures. Furthermore, Jones will assert that any breaches of the forthcoming code of conduct will hold banks, telecommunications companies, and digital platforms accountable for their inaction.