Avoiding the pitfalls of consumer fraud

By Louise Sylvan

One of the core responsibilities of governments and their agencies is protecting members of the public from illegal activity in all its forms.

While individual agencies or departments can be effective on their own, government is often at its finest and most successful when united behind a common cause. One such cause that demands a global response from government is the growth of consumer fraud.  

The lure of easy money, plus the penetration of new technologies, has attracted sophisticated organised crime into the low value high volume end of economic crime. This includes phishing, global lottery scams, cold call investment schemes, advance fee frauds (like the 419 or Nigerian scam), employment scams (low value money laundering/money mules), and many more.

While there is little doubt about the exponential growth of such global scams in all countries, the exact scale of consumer fraud in Australia remains relatively unknown. Many consumers do not report it and when they do, no single agency gathers together the data in its various forms.

What is clear from the information available and the experience of overseas jurisdictions is that it may be costing Australians many millions every year. Surveys from the United States Federal Trade Commission estimate that in 2004, 24.5 million Americans, or 11.2 percent of all US adults, were victims of one or more types of fraud.

In a significant research project on mass-marketed scams released in December 2006, the UK found that one in every 15 UK adults had fallen victim to scams and those losses to consumers (much of it exiting the UK economy) were estimated at 3.5 billion pounds annually. 

In the last three months of 2006, consumers who registered complaints with only one of the Taskforce members, the Australian Competition and Consumer Commission, lost a total of $2.3 million to scams and rip-offs.  Such figures give a frightening insight into the potential scale of the problem in Australia. 

In a truly whole-of-government approach to dealing with the issue, agencies from across Australian and New Zealand governments are launching an information campaign next month (March 2007) under the banner of the Australasian Consumer Fraud Taskforce. The campaign will inform consumers how best to protect themselves from scams with a large range of private sector and non-government organisation partners helping to spread the key message: SCAMS TARGET YOU – Protect Yourself.

In a letter sent out in January, public service commissioner Lynelle Briggs called on all Commonwealth public sector bodies to support the four-week campaign, in particular by following it on the intranet for their staff.

Unlike some cross-agency campaigns which are spearheaded by an individual minister or department, since its creation in 2005, the Taskforce has succeeded in uniting 18 Australian and New Zealand agencies, plus a representative of the State and Territory Police Commissioners, into a unique shared leadership role in mass-marketed fraud. 

As an example of the commitment shown to the campaign, Taskforce members have jointly funded a major research initiative to be conducted by the Australian Bureau of Statistics designed to provide an accurate snapshot of the extent of consumer fraud and scams in Australia and the estimated losses. Information gleaned from the study will allow all bodies involved to better target their resources and identify more effective strategies for dealing with this type of fraud.

Following on from the success of last year’s campaign which attracted a number of prominent private sector partners, the 2007 campaign includes an even stronger showing from businesses that understand the importance of preventing consumer fraud. During the campaign, banks will carry messages on their ATMs while a host of businesses ranging from BigPond to Australian Super will be helping to deliver a consistent message by alerting people to the dangers of scams and the importance of protecting their personal details.

NGO partners play an equally important role. The Indigenous Consumer Affairs Network will be conducting radio interviews and mail-outs to indigenous consumers and CHOICE Online will feature helpful hints for consumers who want to stay clear of the many scams in the market.

In the spirit of a true partnership, week three of the campaign will be led by the Internet Industry Association which will focus on computer crime and how consumers can protect their computers and prevent internet-based fraud.  All private sector and NGO partners will be linking to the government’s main consumer warning website, www.scamwatch.gov.au

Other themes the Taskforce will be focussing on this year will include helping consumers protect themselves from identity fraud, scams involving mobile phones and some of the more common (and unfortunately successful) general scams often reported to agencies like the ACCC.

Since its inception the Taskforce has achieved significant gains in raising the community’s awareness of consumer fraud, but it is unfortunately a task that never ends.

Minimising the harm to Australians and New Zealanders will require a continued  effort from all levels of government and the business community.  Government organisations not currently partners of the Taskforce should consider getting involved by joining the campaign or following the campaign for employees with weekly links to the SCAMwatch website.

Consumer fraud is not a problem government can simply solve given the perpetrators are often in jurisdictions where it is difficult to obtain any enforcement action. But by concentrating our combined resources in a strategic way, we can significantly mitigate the heartbreak and misery it inflicts on our communities.

Louise Sylvan is chair of the Australasian Consumer Fraud Taskforce and deputy chair of the Australian Competition and Consumer Commission.

Comment below to have your say on this story.

If you have a news story or tip-off, get in touch at editorial@governmentnews.com.au.  

Sign up to the Government News newsletter


Leave a comment:

Your email address will not be published. All fields are required