Concept stock photograph depicting Cyber Security theme [Source: AAP Image/Dave Hunt]

Banks, telcos and social media companies could be fined up to $50 million for failing to protect Australians from scammers.

In the federal government’s latest assault in the war on scams, companies could be penalised for failing to stop fraudsters from getting through to consumers in the first place, while victims will be given a clear pathway for redress if they are not at fault.

The proposed laws come in response to more Australians falling prey to predatory actors, who are increasingly using new technology such as generative AI to fleece victims.

It would go towards making Australia the toughest target in the world for scammers, said assistant treasurer Stephen Jones.

“Australians are losing too much money to scams and while we’ve bucked the international trend where scams are doubling every year, losses are still far too much,” Mr Jones said on Friday.

“The way to address that is to put strong obligations on the key businesses within the scam’s ecosystem.”

If enacted, the laws would enable the government to prescribe codes on high-risk sectors, obliging businesses to combat scammers and put in place internal dispute resolution mechanisms for customers.

The hope is that by placing the onus on businesses like social media platforms, they would be forced to stop scams at the source by preventing fraudulent advertisements from being placed on their sites, for example.

The proposed legislation would also set up an external dispute resolution scheme for all scam complaints made under the government’s framework, operated by the Australian Financial Complaints Authority.

“This will greatly assist consumers affected by a scam,” said AFCA chief ombudsman David Locke.

“As an established external dispute resolution scheme that receives more than 100,000 complaints per year, we have experience in managing and resolving scam complaints.”

Businesses would also be required to share information about scammers across the industry and with the government in a timely manner.

The Australian Banking Association welcomed the draft laws, saying only a collective effort from government and private enterprise would win the war against scammers.

“”These codes must address the core problem of people being exposed to scams in the first place,” said association’ chief executive Anna Bligh.

“That means ensuring telcos and the social media platforms have strong protections in place to stop scams reaching Australians.”

The government spent more than $154 million over the last two budgets to tackle scams across the economy.

Scam losses fell year-on-year in 2023 after rising consistently every year since 2016.

Members of the public can submit responses to the draft legislation until October 4.