NADIA MITSOPOULOS:
Well, let’s talk about scams because it is a big problem, and it’s a problem that is getting worse. And, in fact, $2.7 billion, that’s how much money Australians are actually losing to scammers. And new mandatory codes are on the way which will put an obligation on banks, on telcos and social media platforms, so they’ll be fined if they breach these new codes, and if someone is scammed because of that breach then there will be fines for the telco or the social media platform or the bank and compensation as well for the victim. What it won’t do, though, is force banks to reimburse all of its customers who are scammed, which is what banks in the UK will have to do from October, even if the bank is not at fault, even if the bank has not breached any mandatory codes. And I’m just wondering if this needs to be a requirement here as well. 1300 222 720. I did speak to the Assistant Treasurer Stephen Jones about this this morning, and I started by asking him exactly what the new mandatory codes will do.
STEPHEN JONES:
The new codes, which will put obligations on banks, on telecommunications companies and on social media platforms, they’re critical. The social media platforms and the telcos, they’re the vectors through which the scams reach their victims and it’s the bank account that they’re after at the end of it all. So lifting the obligations on them to keep their money safe and their information safe is critical. And if they don’t meet those obligations, then fines will apply. And if people lose money as a result of their breach of obligation, then compensation will flow as well.
MITSOPOULOS:
And what are the specifics of those obligations? Do you set that out in these mandatory codes?
JONES:
For example, with banks, we want confirmation of payee. So when you type in a number, a bank account number, on your banking app, not all banks have a matching name that goes with that account now – so you can see you’re sending the money to the right place. That will be mandatory. Cracking down on mule accounts, which are being used to – as the off ramps for criminals to get money out of a victim and then out of the country, they channel it through mule accounts. So that will be an obligation. Having report and respond mechanisms so a customer can quickly report a suspected scam or a dodgy transaction on their account and having the obligation on the bank to respond quickly. Social media platform far – you know, there’s far too much criminal scam content being published there. So confirmation of advertiser. So somebody who is advertising a product or a service, there’ll need be to confirmation that they’re a bona fide operator, not a scammer and an obligation to pull down that content once it’s been identified or if it’s clear that it’s scam content then it’s got pulled down.
MITSOPOULOS:
Okay. A couple of things to pick up on there. My guest this morning is the Assistant Treasurer Stephen Jones. Why is this taking so long? This was all announced last year?
JONES:
Yeah, a lot of work going into ensuring that we get the details right. And, you know, we’ve also been doing work with the sectors to implement some voluntary measures in place ahead of the codes coming into place. And, indeed, in the telecommunications sector there are already some obligations that have been in place there and we’ve already established the National Anti‑Scam Centre and empowered ASIC to be pulling down a lot of the fake investment websites as well. So –
MITSOPOULOS:
Okay, one thing missing is something that the UK is doing, and from October Britain’s payment systems regulator will force banks to reimburse customers who’ve been scammed into sending money from their accounts. Why won’t you do the same thing?
JONES:
We will have a mandatory reimbursement on banks if they’ve breached the code. But I’m not going to let the social media platforms and the telecommunications companies off the hook too, particularly when they are the major publishers or transmitters of this scam activity. So under our approach we’ll be lifting the bar, putting in place new standards. A breach of the standard will lead to fines and penalties and a breach of the standard that leads to a consumer loss will lead to compensation.
MITSOPOULOS:
Okay. But I’m just wondering, though, why not – it has to be a breach of the code? Why can’t you go further and go all the way, if you like, as is the case in the UK? Because that then puts the responsibility back on the banks – their job is to keep our money safe and they are not doing that.
JONES:
And it’s a responsibility of the social media platforms to ensure that they are not being used by criminals to publish fake investment material which is luring Australians and others into their networks to lose millions and millions of dollars. So, yep, I want banks to be on the hook, but it’s not like our – it’s not like Facebook or these other operators are small, plucky little start‑ups; they’re some of the world’s wealthiest, most profitable companies, and they are going to have to pay when they do it wrong as well.
MITSOPOULOS:
Okay. And I want to talk more about Facebook in a moment. If I can just stick on the banks for a sec, because I guess what upsets people, customers, is that they are being forced to transact online, and the feeling amongst a lot of customers is that they don’t feel that the level of security is like it was with, I guess, a bricks and mortar building. That doesn’t seem to apply in this space, and there seems to be victim blaming – ‘Well, you got scammed. Weren’t you silly.’ They’re sophisticated now it’s hard to see what’s real and what’s not, and that’s why there seems to be a growing call for banks to reimburse these customers.
JONES:
There is no doubt that the scams are becoming more sophisticated, and what we’re seeing at the moment is scam 2.0, and that’s the industrialisation of scams through scam factories in other countries around the world run by criminals and criminal syndicates, and they’re industrialising their emails, their callouts, their web pages and they’re producing them and distributing them by the millions. So that’s 2.0. Scam 3.0 is utilising AI. So it may look like a celebrity, it may look like one of your relatives speaking, but it’s not; it’s been artificially generated, which is why we have to move quickly to uplift our standards in all of these areas. And we can’t let one sector of the economy off the hook, particularly when they are key vectors for the distribution of this material, as social media platforms are.
MITSOPOULOS:
Okay. And I’m not suggesting we let the social media platforms off the hook, and I’ve got some questions about that, but, I guess, you look at the big 4 banks, $30 billion worth of profit in the 2023 financial year, 10 per cent of their profits, if you look at the cost of scams, is $2.7 billion. So people may look at that and go, ‘It’s affordable.’
JONES:
Yeah, nobody is going to get a free ride here. If the banks have done the wrong thing, then they’re on the hook. There’s no doubt about it. But I also want to ensure that other businesses that are doing the wrong thing are held accountable for their behaviour as well, particularly when they are key distributors of scam information. And it just seems to me a little bit bizarre, if I could take an example, you know, Facebook publishes a scam, takes advertising revenue from publishing that scam, a member of the Kalgoorlie Credit Union purchases something because they’ve seen a scam on a Facebook ad, they lose a couple of thousand dollars and the Kalgoorlie Credit Union has to pay up for that and Facebook gets off scot‑free when they’ve made money out of publishing that scam? That doesn’t sound right.
MITSOPOULOS:
Okay. So then under –
JONES:
That just doesn’t sound right to me.
MITSOPOULOS:
So just explain then, under this code in that scenario how can you force Facebook to shut that site down?
JONES:
Well, Facebook and other social media platforms have got some of the best technology in the world. And firstly if it’s been reported and they’ve done nothing about it, then that’s, you know, that’s just home and hosed. But if under our codes they’ll also be required to put in place proactive mechanisms to pull down stuff. So that’s why the verifying your advertiser is absolutely critical. If somebody is pretending to be an investment adviser or a financial adviser and they’re clearly not and they’re publishing material and that gets through, you couldn’t do that as a newspaper, you couldn’t do that as a radio station. It has the same effect when you do it as a social media platform. So we’ve got to lift the standards in those areas as well, and there’s a couple of examples of what we’ll be requiring them to do. And if they haven’t pulled down that material and people lose money, then, frankly, I can’t see why we would be looking to someone else to compensate when a social media platform has done the wrong thing.
MITSOPOULOS:
So are you then saying that under these codes it would force the social media companies to reimburse people who’ve been scammed?
JONES:
Look, reimbursement –
MITSOPOULOS:
Because you can’t force them to do that, can you?
JONES:
Well, what – we’re still in control of what happens in Australia, you know. And we’ve got lots of issues that are arising around social media, whether it’s the stuff we’re talking about or whether it’s mis‑ and dis‑information, whether it’s other sexually explicit and harmful content like deepfake pornography material. We’re moving across a whole range of areas and saying nobody is above the law. Whether you’re a multinational or a local operator, you’ve got to comply with Australian law. So that’s the first thing to say, and we’re not going to lay down just because something is a big, powerful multinational and say we’re not going to have the right sort of laws in place to protect Australians. So that’s the first thing I want to say about that. Compensation is part of it, but actually preventing something happening in the first place is much more important. We don’t say in the area of car safety, for example, ‘Well, we’ve got compulsory third‑party insurance so we don’t have to worry about seatbelts and road rules and road safety because if an accident happens somebody will get compensated.’ We don’t say that’s good enough –
MITSOPOULOS:
Well, I don’t think that’s a fair comparison. I mean, someone chooses not to put a seatbelt on; someone doesn’t choose to be scammed.
JONES:
No, the point is we have rules that say you’ve got to have safety standards in cars and cars have got to be fitted with seatbelts and they’ve got to comply with Australian safety standards. So car manufacturers have obligations when they’re putting a product on the Australian market. So, too, should telecommunications companies, banks and social media platforms. It’s about prevention as the first line of defence and compensation when that goes wrong.
MITSOPOULOS:
Okay. So, then, if I take the scenario of, say, Andrew Forrest, who’s currently, you know, taking Meta to court. So they’ve repeatedly – and so has Gina Rinehart – tried to take down sites where sophisticated AI‑generated scams are impersonating them and then it’s going on social media asking people to invest. So would you under these codes be able to get that sort of thing pulled down? If Andrew Forrest came and said, ‘That’s not me, I’m not spruiking that,’ will you under these codes be able to have that pulled down immediately?
JONES:
Yes, it should be being pulled down. And, you know, I’ve followed Andrew’s case closely and congratulate him on the steps that he is taking. Let’s be frank, not every Australian has the resources that he has available to them to, you know, hire lawyers in the US to take a matter like this on, which is why – and it points to the fact that we’ve got big gaps in the law that don’t create clear obligations that need to be put in place. And it’s not just Andrew Forrest; there wouldn’t be a prominent Australian who hasn’t had their identity utilised by scammers with promotions on social media platforms pretending to be somebody who they’re not with the attempt to steal Australians’ money. So it just goes to my point that prevention has got to be the first line of defence, and having laws and obligations in place which require the platforms to remove this content, to detect and prevent and to remove it when it is reported to them.
MITSOPOULOS:
Stephen Jones, the Assistant Treasurer, is my guest this morning. Just one final question, it’s just regarding surcharges on debit and credit cards. It looks like the Reserve Bank is now looking at that. Is that something that should be banned?
JONES:
I think the – well, we’ve got the payments board of the Reserve Bank which has got the power under Australian laws to deal with, review and create the laws in relation to or the regulations in relation to that. But I think there is a case to be looked at here. I know Australians are very concerned about opaque surcharges that are being placed on them by these card operators, and I think it needs to be looked at.
MITSOPOULOS:
Yeah, I mean, they’re taking about $4 billion from our bank accounts. It sounds like the banks are having a bit of a laugh here.
JONES:
Yeah, well, you know, the amount of money that’s charged in these transactions should be not one fraction of a cent more than what it actually costs the business or the operator to make those payments. So they do need to be looked at.
MITSOPOULOS:
That was Stephen Jones, the Assistant Treasurer. He’s also the Minister for Financial Services. He was speaking to me a little earlier this morning.