ACCC calls for new laws for digital platforms

The Australian Competition and Consumer Commission (ACCC) has called for digital platforms to be subject to a series of new anti-scam and consumer protection laws, with the competition watchdog also urging for the introduction of a new mandatory dispute resolution process and the creation of a new industry ombud for consumers and small businesses to address unheeded concerns.

The new laws will require digital platforms to address and combat scams, harmful apps and fake reviews. This comes on top of proposed mandatory codes of conduct for certain online platforms and services designed to protect against “widespread, entrenched, and systemic” harms that the ACCC says have arisen from these services.

Among these digital platform services include online search giants (e.g. Google), social media providers (e.g. Facebook), and e-commerce retailers (e.g. Amazon).

The introduction of the laws comes in response to what the ACCC observed was a significant and sustained increase in scams on digital platforms targeting consumers.

According to Scamwatch, losses from scams conducted via social networking and mobile apps almost doubled between 2020 ($49 million) and 2021 ($92 million) and, given low levels of reporting – with only an estimated 13 per cent of victims having reported their scam to Scamwatch and one in three victims found not to have reported their scam to anyone − the actual sum of money lost to scams on digital platforms could be likely much higher.

“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,” ACCC chair Gina Cass-Gottlieb said.

She also stressed that more action was needed to tackle fake reviews from platforms whose services featured 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,” Cass-Gottlieb added.

The ACCC’s fifth report of the five-year Digital Platform Service Inquiry recommended new laws that require digital platforms to:

  1. provide user-friendly processes for reporting scams, harmful apps, and fake reviews, and to respond to such reports;
  2. reduce the risk of scams by verifying certain business users such as advertisers, app developers and merchants;
  3. publish review verification processes to provide important information to readers of online reviews to help them assess the reliability of reviews on the platform;
  4. report on scams, harmful apps and fake reviews on their services, and measures taken to address them;
  5. ensure consumers and small businesses can access appropriate dispute resolution, supported by the establishment of a new digital platform ombuds scheme.

The report also pointed to concerns over competition in the market and that, without effective regulation, large digital platforms are both able and incentivised to engage in conduct that is harmful to competition. This includes “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”.

The ACCC said it recommended 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.

Service-specific codes of conduct could include targeted obligations to:

  1. prevent anti-competitive self-preferencing, tying and exclusive pre-installation arrangements;
  2. address data advantages;
  3. ensure fair treatment of business users;
  4. improve switching, interoperability and transparency.

The Australian Government directed the ACCC’s Digital Platforms Branch to conduct a five-year inquiry into markets for the supply of digital platform services and their impacts on competition and consumers, with a focus on competition and consumer issues raised in the course of the Digital Platform Services Inquiry, the Digital Advertising Services Inquiry (2020-2021) and the Digital Platforms Inquiry (2017-2019) to date, and whether additional measures should apply to digital platform services.

This report was provided to the Treasurer on 30 September 2022, as required by the Direction.