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ACCC 2022 In Review | Scams

By Shaun Temby, Christopher Marsh, Isabelle Heath

• 09 February 2023 • 8 min read
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It’s no surprise that protecting vulnerable consumers from scams, remains one of the ACCC’s enduring priorities.

In late 2022, the ACCC reported that Australians had lost over $526 million to scams in throughout the year, as scammers continue to target unsuspecting people and businesses with increasing sophistication. In keeping with the trends observed in 2021, investment scams account for the biggest financial losses (over $351 million), followed by dating and romance scams (over $38 million) and phishing scams (over $21 million). Interestingly, out of all scam categories, phishing scams had the highest number of reports to Scamwatch. Investment scams and dating and romance scams come in at eighth and tenth, respectively. Given these statistics, it’s no surprise that protecting vulnerable consumers, particularly from scams, remains one of the ACCC’s enduring priorities.

Digital Platform Services Enquiry

On 11 November 2022, the ACCC released the fifth interim report for the Digital Platform Services inquiry. We discuss this report in further detail in the Technology, digital platforms and telecommunications section of this report.

The report highlights scammers using digital platforms as an effective means of accessing individuals and businesses by taking advantage of their inadequate levels of security and consumer verification. Consequently, in the report, the ACCC recommended the introduction of targeted measures to protect consumer and business users of digital platforms against scams. These measures include requiring digital platforms to:

  • provide user-friendly processes for reporting scams
  • respond to user reports of scams
  • verify business users such as advertisers, app developers and merchants
  • publish review verification processes
  • report on scams on their services and the measures taken to address them.

These measures place a greater onus on digital platforms to protect users from scams and align with reforms occurring overseas, seeking to place an obligation on digital platforms to be more responsible for scams occurring on their platforms and under their watch. For example:

  • the European Union’s Digital Services Act (DSA) contains due diligence obligations that will apply to all digital services that connect consumers to goods, services or content, such as mechanisms for users to flag online content that may be illegal.
  • the United Kingdom is bolstering the enforcement powers of its Competition and Markets Authority to allow it to impose financial penalties for breaching consumer protection laws.
  • the United Kingdom’s proposed Online Safety Bill has a particular provision specifically targeting scam advertisements which imposes a duty on service providers to put in place systems and processes designed to prevent individuals from encountering fraudulent content online.
ACCC Year in Review | Meta Platform

Meta Platforms Inc alleged misleading conduct concerning scam investments

In March 2022, the ACCC initiated proceedings against Meta (formerly Facebook), alleging it engaged in misleading or deceptive conduct by publishing advertisements on Facebook promoting scam cryptocurrency and money-making initiatives. The advertisements featured allegedly fake quotes of prominent public figures, including David Koch, Dick Smith and Andrew Forrest, endorsing the schemes and encouraging consumers to provide personal details that would then be used by scammers. The advertisements also contained links that directed users to a fake media article that included quotes attributed to the public figure featured in the advertisement – seemingly endorsing the cryptocurrency or money-making scheme. Consumers were invited to sign up and were then subsequently contacted by scammers who used high pressure tactics, such as repeated phone calls, to convince users to deposit funds into the fake schemes. The ACCC believes the scam caused an estimated consumer loss of around $99 million.

In the proceedings, the ACCC alleges that Meta was aware of the scam due to complaints being made by the featured public figures, as well as other ordinary consumers. Further, the ACCC alleged that Meta did not take sufficient action to stop the scam or the related advertising on pages controlled by it. The proceedings are ongoing, and Meta is currently defending the claim. The matter has not yet been listed for a final hearing.

Then-ACCC Chair Rod Sims said,

"The essence of our case is that Meta is responsible for these ads that it publishes on its platform,"

The proceedings against Meta will provide a unique opportunity for the Federal Court to consider how the Australian Consumer Law applies in the cryptocurrency context. Additionally, it will be interesting to see how the parties and the Federal Court deal with the decision in Google Inc v Australian Competition and Consumer Commission 249 CLR 435. In that decision, the High Court held that Google did not engage in misleading or deceptive conduct in publishing ‘sponsored links’ in response to web page searches. The key issue in the proceedings was the level of control that Google had over the sponsored links that were displayed. In that instance, the High Court found that Google lacked the required level of control. The level of control over, and endorsement of, any advertisements by Meta will likely be a key issue in the Meta proceedings.

Regardless of which party is successful in this matter, there will undoubtedly be far-reaching consequences for other digital platforms. If the ACCC is successful, digital platforms will need to rethink the kinds of targeted advertising they publish on their platforms. If Meta is successful, the ACCC will need to consider whether any new laws need to be introduced to better protect consumers.

Spike in 'Hi Mum' text message scam

‘Hi Mum’ or ‘family impersonation’ scams involve scammers contacting unsuspecting victims and posing as a family member or friend. The scammer will claim to be contacting the victim on a new number due to a lost or broken phone. The ruse continues while the scammer develops a rapport, with the scammer then requesting money to help pay a bill or replace a phone. The ‘Hi Mum’ scams initially peaked in June and July 2022 but re-emerged as the year drew to a close. Scamwatch reported in August 2022 that over two thirds of ‘Hi Mum’ scams were reported by women over 55 years of age and account for more than $1.4 million in losses.

Opportunistic scams following data breaches

This year saw two significant data breaches involving the telco Optus and health insurer Medibank. The data breaches exposed current and former customers’ sensitive and personal information including, name, date of birth, phone numbers, email and residential addresses and identity document numbers. These details can and will, be used by scammers to target people and businesses in any way possible. The ACCC warned that, following data breaches, individuals and businesses should be extra vigilant as they will likely experience an increase in the number of phishing emails, phone calls and SMS messages attempting to scam unsuspecting victims.

This year, we increasingly saw scammers taking advantage of data breaches by impersonating companies and individuals. For example, following the Optus data breach, Optus customers began receiving communications about replacement sim cards claiming to be from Optus. ‘Hi Mum’ scammers began claiming to have new numbers due to the Optus data breach. Scammers were also impersonating hackers and demanding financial payment in exchange for erasing a customer’s data from the ‘hacker’s’ data file.

Then-ACCC Deputy Chair, Ms Delia Rickard said,

"Cyber criminals have capitalised on the data breach by impersonating government departments and businesses to carry out identity theft and remote access scams."

The rise in scams targeting the agricultural sector

This year saw a rise in scams targeting the agricultural sector. The ACCC reported that between 1 January and 31 August 2022 there was a 20% increase in financial losses to Australian farm businesses that were the victim of scams compared to the same period in 2021. The most common scam targeting the agricultural sector involved the sale of heavy machinery, with scammers enticing farmers with attractive online deals for tractors and other farm machinery.

National anti-scams centre

In the 2022 Federal Budget, the ACCC received seed funding of 9.9 million in the 2022 Federal budget for a national anti-scams centre to support the community in the fight against scammers. The ACCC has said it will use the funding to collaborate with other government agencies to prepare for the establishment of the centre.

Ms Cass-Gottlieb said,

"Losses reported to Scamwatch from scams conducted via social networking and mobile apps almost doubled in the last year between 2020 and 2021, with $49 million recorded in 2020 compared with $92 million in 2021. This shows that digital platforms need to do more to stop their users from being scammed."

There are no signs of scammers slowing down, meaning that scams will remain a strong focus for the ACCC in 2023. In particular, following on from the fifth interim report for the Digital Platform Services inquiry, we expect the ACCC will strongly press for law reform in this space. Given the obvious public benefit, we expect at least some of the ACCC’s recommended measures to be implemented in 2023. The only potential impediment to the changes is pushback from the major digital platforms – most likely on privacy grounds and due to the potential costs of certain measures.

We also expect the ACCC to continue with its education efforts in conjunction with other government departments and agencies, consumer groups and private sector organisations. Indigenous Australians, people with disabilities and those who are culturally and linguistically diverse will be a focus of these activities – as these groups of people are often over-represented in scams resulting in financial losses.

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By Shaun Temby, Christopher Marsh, Isabelle Heath

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