Finance Finance News ‘Whack-a-mole’: Scam text crackdown to force telcos into action
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‘Whack-a-mole’: Scam text crackdown to force telcos into action

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Australians frustrated with scam text messages will be protected under new rules that force telcos to track and block fraud, but experts warn the efforts won’t stop worsening financial crime.

The Australian Communications and Media Authority (ACMA) finalised a crackdown on SMS scams on Tuesday, saying tougher rules will curb a fast-growing scam epidemic that cost Australians $6.5 million in 2021.

The new rules force telcos like Telstra and Optus to identify, trace and block text fraud, and to publish data that helps competitors do the same.

But experts said the changes won’t be enough to stem the rising tide of financial crime.

“I have no doubt this will have an impact, but offenders will just move onto a different type of technology,” said Queensland University of Technology associate professor Cassandra Cross.

“Australia needs a national fraud policy – we don’t have a co-ordinated approach to fraud prevention in this country.”

Scam text crackdown

Tuesday’s crackdown expands a 2020 industry code that has seen telcos block about 549 million scam phone calls over the past two years – with the new rules focusing squarely on texts.

Telcos will be now be required to take further steps to find scammers, track their activities and block their numbers.

Edith Cowan University professor Paul Haskell-Dowland said the requirements will involve automated flagging and human intervention.

“There will be a sifting [of texts] with a confidence threshold, and anything that exceeds it will be auto-blocked,” he said.

“This has been done for many years with email.”

ACMA chair Nerida O’Loughlin expects the rules to reduce scam losses but conceded they wouldn’t be a “silver bullet” to stop fast-growing rates of financial crime across Australia.

“SMS scams can be highly sophisticated and have devastating financial and emotional impacts for victims. In some circumstances, scammers can take a person’s life savings and cause profound ongoing distress,” Ms O’Loughlin said.

“These scam messages are deeply frustrating to Australians because they are received on devices that are an essential part of our social and economic lives.”

Telcos were involved in the design of the new code and will now face penalties of up to $250,000 for failing to comply with the crackdown.

The Communications Alliance said the new rules were a step forward.

“The new anti-scam short message code provisions, now registered, can make a significant impact to reduce consumer harm caused by scam texts,” CEO John Stanton said.

Telstra declined to comment, while Optus said the additional industry collaboration “will provide greater protections for Australians”.

New rules no panacea

Dr Cross said the regulations would help reduce the volume of scam text messages, but warned consumers must be vigilant as the technology won’t be a full-proof solution.

“Fraud is a human problem. Technology certainly has an important role to play, but it’s still that human decision where you believe in the circumstances that have been presented,” she said.

Dr Cross fears that as regulators crack down on phone and text scams, criminals will move to other technologies and methods because there will still be an economic incentive to defraud people.

She said the crackdown on scam phone calls in 2020 was one of the drivers of the recent rise in scam text messages.

Ultimately, Dr Cross said the explosion in scam losses over recent years – rising to $2 billion in 2021 – shows that more needs to be done to protect Australians from financial fraud, including through texts.

“ACMA and the ACCC drive a lot of very good work across this space, but it’s not co-ordinated enough and people don’t necessarily know what others are doing,” Dr Cross said.

“If there was a national strategy to target fraud prevention and reduction it would be better.”

Professor Haskell-Dowland likened combating financial scams to an international game of “whack-a-mole” between regulators and criminals.

“We’re highly motivated to stop this from happening,” he said.

“But our adversaries are equally as motivated, if not more motivated, to be successful.”