It could cost digital platforms and banks more than $100m to comply with new requirements to crack down on scams, according to modelling by the Treasury.
The Treasury’s impact analysis found that banks – especially small and foreign-owned banks – were likely to fork out $101m in the first year and $32m each year thereafter to avoid multimillion-dollar fines for failing to prevent scams.
The analysis found digital platforms were likely to incur $106m in costs in the first year and $42m each year thereafter; telcos were expected to pay $22m then $14m a year.
Australians lost a record $3.1bn to scammers in 2022, with 2.5% of Australians – about half a million people – falling victim to scammers in that year alone.
Under the reforms announced last year by the Albanese government, designated industries – which include telecommunications, social media and banks – must take reasonable steps to prevent, detect, report, disrupt and respond to scams or face fines.
The scheme includes mandatory reporting requirements to share intelligence about scams between businesses and the government.
The reforms are expected to roll out immediately after the bill passes through parliament.
The bill, introduced in November, has in principle support from the Coalition but the opposition has argued the government has left the reform too late to be implemented before the election.
The Australian Banking Association (ABA) and the Customer-Owned Banking Association (Coba) both cautiously welcomed the reforms. However, the sector has said the Treasury likely underestimated compliance costs.
The Treasury noted that “most banks have already voluntarily committed to implementing anti-scam activities under the scam-safe accord” and most were members of the Australian Financial Complaints Authority (Afca).
It said that “most” of the regulatory cost would be born by banks that were not affiliated with the ABA or Coba “which would be required to invest in capabilities to meet the scam-safe accord”, including 46 Australian branches of foreign-owned banks.
All banks were expected to need to invest more in external dispute resolution “due to an initially increased number of scam complaints each year” to Afca, it said.
A Coba spokesperson told Guardian Australia it supported the overall goals of the scam prevention framework bill but warned that “overly burdensome” reporting requirements “risk diverting resources from proactive scam prevention measures and may not ultimately contribute to meaningful reduction in scam activity”.
“We understand the devastating impact scams have on individuals and communities, which is why customer-owned banks remain unwavering in our resolve to protect customers.”
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In an earlier round of consultation the ABA noted the law “introduces substantial new compliance obligations” but “in some cases there is no assurance that these requirements would effectively reduce scams”.
It warned that “uncertainty” about new obligations “could hinder large-scale investment aimed at preventing and detecting scams”.
The Treasury analysis said that for digital platforms, most of the regulatory cost would fall on those “offering social media, paid search advertising and direct messaging services”.
In September Digital Industry Group Inc – which represents the big tech companies and social media platforms – welcomed what its managing director, Sunita Bose, called “efforts to prevent … relentless criminals robbing Australians of hard-earned savings”.
But Digi has raised concerns about whether the new laws could encourage the removal of legitimate small business activity and delay compensation compared with international models – such as the UK, where banks reimburse victims.
“There could be a protracted examination through an external dispute resolution body of different companies’ relative roles in the scammers’ attack, in order to determine possible redress,” it said. This could result in a delay of “years for any form of reimbursement”.
Complaints to Afca topped 100,000 for the first time in 2023, and of those complaints, 9,000 were related to scams. The Albanese government has said that it had invested $180m to tackle scam activity and that losses to scams had decreased for the first time since 2016.
