Why defeating scammers is not a task for individuals

The English poet John Donne wrote in 1624:

No man is an island
Entire of itself
Every man is a piece of the continent
A part of the main...

Four hundred years later, to be an island in our interconnected world would take an incredible amount of effort, beginning with never using a phone or the internet.

I’m not sure it would even be possible for most of us, given we can’t access much of what we need to survive without using a credit card or an app.

We are individuals, but we are also interdependent.

I make this point not because I am a sentimentalist (although I am), but because I want to challenge the idea that we’re all isolated economic units, somehow insulated from each other and the broader world, each acting independently.

Why does this idea that we are more than individual consumers matter? Let’s talk about scams.

The well-meaning African prince offering to share his Nigerian inheritance if we just pay him some money has been superseded by much more sophisticated AI-driven models replicating institutions and people we trust and rely on.

Anyone can be and has been scammed, including the most intelligent and capable executives, academics, IT professionals, politicians, public servants, and even charity workers. Australians are reported to lose close to $3 billion a year to scams. And that’s just what’s reported.

We’re often told it’s not if, but when, we will be scammed.

Unfortunately, the proposed anti-scam legislation the government is taking to the Parliament fails to recognise these fundamental facts. Aside from some principles-based guidelines for businesses, and increasing fines for negligence, the underlying assumption in the legislation is that individuals are to blame if they are scammed.

Banks, telcos and internet service providers make a profit because we trust them and pay them to look after our money and our accounts. If we’re scammed by international criminals (often posing as banks or telcos or government agencies), the government, banks, telcos and internet service providers would like us to think it’s all our fault.

The capacity of any individual to put in place comprehensive and effective anti-scam procedures is almost non-existent. We pay banks to do exactly this task and they have enormous resources to apply in developing the most foolproof anti-scam systems.

Under proposed government anti-scam legislation, if a consumer wants to be compensated for their losses, they’ll have to lodge an application, make a case, in some instances go to hearing, or even hire a lawyer and head off to court – all at their own expense.

As the CEO of the Australian Communications Consumer Action Network (ACCAN), Carol Bennett, pointed out in an article this week:

“Banks in the UK have been voluntarily reimbursing scam victims at an average rate of 67 per cent since 2019. This will soon increase to 100 per cent in October, when new mandatory reimbursement laws come into force. By contrast, Australian banks only reimburse between 2 and 5 per cent of consumer losses, according to the Consumer Action Law Centre.”

Not only would I like to see the UK model of automatic reimbursement copied in Australia, but I think it should be extended to all charities and NFPs.

If any charity or community organisations is scammed, the bank or relevant finance institution should automatically have to reimburse the money lost.

If the bank thinks they’re being hard done by because the consumer’s negligence contributed to the scam, they can lodge an appeal to an independent authority at their expense (as in the UK model). I’m pretty confident this would reduce the level of scams across our sector.

Let’s also talk about grocery prices. This is my graph of the week, produced by Greg Jericho from the Australia Institute:

Again, I ask, how is any individual consumer meant to take action over this kind of collusion?

Thank goodness we have the Australian Competition and Consumer Commission (ACCC), which is now pursuing these companies.

The reality is that individuals are not best placed to put in place protections or to police them, and yet time and again it seems the individual is seen as liable for their own losses, their own decisions to bank with a particular bank, or buy groceries at a particular store.

Holding business to account should not be left up to individual consumers.

Governments and the regulators they put in place all have a critical role to play in limiting the harm caused by corruption and uninhibited greed.

In the case of scams, companies that profit by offering to safely manage our money need to be accountable if their systems fail to protect us.

We aren’t islands any more than we are isolated individual economic units acting as separate consumers in a fair and safe marketplace. We are our communities, and when we encourage people to link arms and work together, we can build continents more powerful than governments or business.

Increasingly I believe this area of collective action against excessive greed and unethical behaviour by vested interests will become a critical part of our work.

David Crosbie has been CEO of the Community Council for Australia for the past decade and has spent more than a quarter of a century leading significant not-for-profit organisations, including the Mental Health Council of Australia, the Alcohol and Other Drugs Council of Australia, and Odyssey House Victoria.