Consumer Scams in Australia: An Overview

As part of a global effort to fight mass-marketed consumer frauds and scams, consumer protection agencies in a number of western countries participate in a month of fraud prevention activities each year to raise awareness of the problem and provide advice to consumers on how to avoid being victimised. An initiative of the International Consumer Protection and Enforcement Network in 2000, the campaign is joined by more countries each year, and in March 2006 some 33 countries participated. In Australia and New Zealand, 18 government agencies comprise the Australasian Consumer Fraud Taskforce (ACFT), established in March 2005 to support the network's activities. The key message to consumers in 2006 was 'when a scam comes calling - delete it, hang up, destroy it'. This emphasised the fact that consumers are their own best defence against scams, and should always err on the side of caution when conducting business transactions. This paper presents the results of a pilot study undertaken during March 2006 in which consumers who contacted the Infoline at www.scamwatch.gov.au, agreed to provide information on their experiences of consumer fraud over the preceding year. To date there has been limited statistical data to inform the development of policy in this area. Toni Makkai Director Throughout history, consumers have been targeted by deceptive and misleading practices that have ranged in subtlety and complexity from the barely plausible to the refined and sophisticated. Grabosky, Smith & Dempsey (2001 : 1 05-1 29) proposed a simple classification of the extensive range of illegal practices perpetrated against consumers, in the traditional marketplace and the electronic environment of the 21 st century (Table 1). The fourth category has been refined to accord with current law enforcement usage of identity fraud as outlined by the Australasian Centre for Policing Research (2006). Such practices can arise out of transactions involving door to door sales, telemarketing, internet sales, and mail orders including email. The subject matter can involve contracts relating to home repairs, buying and servicing motor vehicles, purchasing health care products and services, as well as financial and investment advice. Funds can be obtained from consumers using all payment systems including cash, cheques, electronic funds transfers, and card-based transfers of funds. Official statistics At present, official police statistics are not collected in such a way that the consumer status of victims can be identified. Crimes involving deception are simply grouped together and include fraud against consumers, business and government. Police statistics do not show the methodologies used to perpetrate consumer fraud, or the extent to which, for example, email and e-commerce are involved. In its National information development plan for crime and justice statistics, the Australian Bureau of Statistics (ABS: 2005) has identified the improvement of fraud and electronic crime data as one of its 1 2 priority areas. The aim is to compile data to measure the size of the problem, and to obtain offender and victim information including economic impacts. In 2007, as recommended by the ACFT, the ABS will include key questions on consumer fraud in its regular household survey. Agency administrative data At present, there is no national uniform data collection scheme in operation for Australian consumer protection agencies. Australian Government agencies record the number and type of inquiries and complaints from consumers for their own internal purposes; hence data are not comparable across agencies. For example, the Australian Securities and Investments Commission focuses on financial and investment matters, while the Australian Communications and Media Authority deals mainly with scams involving unsolicited email (spam). The Australian Competition and Consumer Commission has jurisdiction over consumer complaints that fall within the provisions of the Trade Practices Act 1974 (Cth). …