AFCA Caught in Scam Operations, Urged to Strengthen Protocols

The Australian Financial Complaints Authority (AFCA) finds itself inadvertently entangled in sophisticated scamming operations.

The Stockbrokers and Investment Advisers Association (SIAA) has identified a tactic whereby fraudsters use AFCA's complaint system to lend credibility to their scams by taking over victims' accounts and falsely lodging complaints.

In a formal submission to AFCA, SIAA voiced concerns over international fraud syndicates that orchestrate these schemes from overseas bases. An example highlighted by the SIAA describes a compound in Myanmar staffed by forced laborers from countries like the Philippines and Thailand, coerced through violence to meet scam-related quotas. These operations deploy identity theft to open accounts without the victim's consent, thereby evolving the fraud risk landscape for Australian consumers.

According to the SIAA, scammers often file complaints with financial institutions as 'proof of life' to deceive companies into recognising them as legitimate customers. This practice extends to threats of complaining to AFCA over minor dissatisfactions, forcing financial firms into costly responses. The larger firms, which face a $1,000 charge upon escalation to AFCA, lack protection under the current system against manipulation by savvy fraudsters.

The details prompted SIAA to express interest in learning about AFCA's measures to prevent such exploitation. A proposed solution is the introduction of a "verification" fee: a pre-complaint fee that would ensure only verified claims proceed to AFCA review. This, SIAA argues, could deter fraudulent settlements and allow firms to identify potential scams.

The recommendation underscores a need for friction and verification within AFCA's framework to safeguard financial services and prevent abuse of AFCA processes, emphasizing the significant implications for firms battling fraud.

Published:Tuesday, 17th Jun 2025
Source: Paige Estritori

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