Canberra unveils major $14.7 million compensation package for scams

The government will donate $14.7 million in funding to the Australian Financial Complaints Authority to create a ‘single door’ for scam victims to hold social media platforms, banks and telecom companies accountable.

The pathway would be available to all victims who have exhausted internal dispute resolution channels, even if the complaint was against multiple regulated sectors.

Assistant Treasurer Stephen Jones called the funding “an important improvement in protecting consumers from scam activities.”

“Our crackdown on scams will cut off the avenues scammers use to target Australians by raising the bar for what businesses must do to prevent them,” he said in a statement last week.

“Victims of fraud will have a clear path to redress.”

“We want scam victims to know the government has their backs, and we want businesses to understand they have a responsibility to protect Australians from these often devastating scammers.”

The measure means a major expansion of compensation options for victims of fraud against large companies.

Currently, social media companies have no internal or external dispute resolution mechanism and redress is “almost impossible,” the government said.

The $14.7 million funding package would be allocated over two years to AFCA, the body that will implement the external dispute resolution program under the government’s new scam prevention framework.

It would also operate on top of AFCA’s existing jurisdiction for non-fraud complaints relating to financial services.

Recent data shows that the financial complaints body reported around 11,000 complaints about fraud, out of a total of more than 100,000 complaints against financial companies in the last financial year.

“Today’s announcement will support the significant expansion of AFCA’s remit to include fraud complaints against telecom companies and certain digital platforms,” the government said.

There was draft legislation for the fraud prevention framework released last month.

The initial reforms will force banking, telecommunications and social media companies to step up efforts to prevent scams or face fines of up to $50 million in an effort to protect small businesses and consumers.

The consultation on the exposure draft concluded on October 4, with the government now considering the feedback before introducing a bill to Parliament later this year.