Australia Targets Internet Giants with New Law to Combat Online Scams, Threatens Massive Fines

SYDNEY, Australia — Australia is set to establish stringent regulations by year-end that will compel internet companies to actively prevent the hosting of scams or incur substantial penalties. This move marks a potential escalation in the ongoing struggle between the Australian government and major technology firms.

The initiative, driven by the Australian Competition and Consumer Commission (ACCC) in collaboration with the treasury department, aims to craft a compulsory, enforceable anti-scam code. This legal framework would mandate that companies enact reasonable protective measures for users and implement an effective complaint management system.

Discussions are in progress with stakeholders from the internet, banking, and telecommunications sectors to shape this legislation. These industries are confronting the surging menace of online scams which has seen the financial losses of Australians triple to AUD 2.7 billion ($1.8 billion) from 2020 to 2023, reflecting a global trend exacerbated by increased online activity during the pandemic, government data shows.

In a notable case spotlighting the urgency for regulatory intervention, mining billionaire Andrew Forrest has initiated legal proceedings against Meta, the parent company of Facebook, in California. Forrest’s legal action stems from his claim that the social media giant failed to halt the circulation of cryptocurrency scam ads misusing his image that contributed to significant financial losses for Australians.

Currently, the regulatory framework in Australia specifically targeting scam prevention is limited to telecommunications providers. However, the alarming increase in scam-related financial losses has catalyzed the ACCC to advocate for broadening the accountability to encompass all relevant sectors.

Furthermore, the introduction of this comprehensive anti-scam code could potentially strain the relations between Australia and the tech industry, which has historically relied on U.S. legal standards that largely absolve platforms from direct responsibility.

Gina Cass-Gottlieb, Chair of the ACCC, emphasized the urgency and necessity of these legal reforms. “We do need, we think, very clear and specific enforceable legal obligations,” Cass-Gottlieb stated in a recent interview. She highlighted that the proposed codes would encompass industry-specific guidelines and are anticipated to be implemented by the end of the current year.

Companies failing to adhere to the new codes would face significant fines, with penalties possibly reaching up to AUD 50 million, three times the benefit derived from the wrongdoing or 30% of the company’s turnover during the period the incident occurred, as outlined by the treasury department.

The ACCC is also independently pursuing a legal case against Meta for allegedly failing to prevent scam advertisements featuring prominent Australians, thus advocating for a mandatory code that could streamline and strengthen enforcement by reducing reliance on after-the-fact legal actions, which are often protracted and costly.

In response to the forthcoming regulations, Meta has voiced concerns over the mandatory nature of the code, suggesting in a January submission that it could stifle innovation by forcing companies to prioritize compliance over technological advances.

As Australia continues to forge a path towards better consumer protection in the digital age, the proposed regulations signify a critical shift aimed at holding internet companies more accountable, potentially setting a global precedent in the fight against online scams.