ACCC recommends strong requirements for combatting scams

The Australian Competition and Consumer Commission (ACCC) has recommended stronger requirements for combating scams, harmful apps and fake reviews in a new report.

The ACCC has released the fifth report of its five year Digital Platform Services Inquiry proposing a number of steps to address harms from digital platforms to Australian consumers, small businesses and competition.

The report has also proposed mandatory codes of conduct for certain platforms and services to protect and promote competition.

Gina Cass-Gottlieb, chair at the ACCC said the expansion of digital platforms in Australia has brought many benefits to Australian consumers and businesses.

“This expansion of digital platform services has also created risks and harms that our current consumer and competition laws are not always able to address. Our analysis has identified concerning consumer and competition harms across a range of digital platform services that are widespread, entrenched, and systemic,” she said.

“The critical positions that digital platforms hold, as ‘gatekeepers’ or ‘intermediaries’ between businesses and consumers, mean they have a broad influence across the economy, making the reforms we are recommending crucial and necessary for all Australians.”

Without effective regulation, large digital platforms have the ability and incentive to engage in conduct that is harmful to competition.

This can include preferencing their own services, or imposing tying arrangements where users of a digital product or service are pushed or compelled to use another service or product, such as smartphones pre-loaded with a certain bundle of apps. These poor competition outcomes harm consumers and business users.

The ACCC recommends a new regulatory regime to work alongside Australia’s existing competition laws that would address anti-competitive conduct, unfair treatment of business users and barriers to entry and expansion by potential rivals.

“We are calling for service-specific codes of conduct that apply to designated digital platforms,” Cass-Gottlieb said.

“This would ensure the obligations are appropriately targeted to particular competition issues present in specified digital platform services, allow consultation with stakeholders, and provide the flexibility to address emerging and new forms of harmful conduct.”

The report also reiterates the ACCC’s support for a new economy-wide unfair trading practices prohibition.

The ACCC and other agencies have observed a significant and sustained increase in scams on digital platforms targeting consumers, including those experiencing vulnerability.

In addition, consumers have experienced harms from inappropriate and fraudulent apps made available on app stores, as well as from fake reviews and review manipulation.

“Digital platforms that host or otherwise act as intermediaries between scammers and their victims are in a unique position to identify and stop scams and remove harmful apps,” 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.”

Cass-Gottlieb said there is a need for more action on fake reviews from platforms whose services feature ratings and reviews, including those appearing on search, social media, app stores and online marketplaces.

“These problems have been made worse by a lack of avenues for dispute resolution for consumers and small businesses, who often simply give up on seeking redress because they cannot get the digital platforms to properly consider the problem,” she added.