The Australian and Consumer Competition Commission (ACCC) wants stricter regulation to tackle problems like online scams, untrustworthy apps and fake reviews, placing the responsibility on big tech companies like Meta and Google to address the harm to consumers and small businesses.
The ACCC’s fifth report in its five-year existence Research on digital platform services proposes that technology platforms be subject to mandatory dispute resolution procedures and stricter requirements to combat fraud and other problems.
Scamwatch saw the value of social networking and mobile app scams reported to them nearly double to $92 million in 2021. It is estimated that only 13% of victims report their scam to Scamwatch, while a third of victims do not tell anyone that they have been scammed.
The ACCC report proposes mandatory codes of conduct for platforms such as Google and Facebook’s parent company Meta, and services to protect and promote competition.
ACCC Chair Gina Cass-Gottlieb said the expansion of digital platform services has created problems that current consumer and competition laws cannot solve.
“Our analysis has identified consumer and competitive harm across a range of digital platform services that are widespread, entrenched and systemic,” she said.
“The critical positions digital platforms occupy, as ‘gatekeepers’ or ‘middlemen’ between businesses and consumers, mean they have broad influence across the entire economy, making the reforms we recommend critical and necessary for all Australians.”
Scams continue to be a major concern for the regulator and other agencies, along with the proliferation of rogue apps in app stores, fake reviews, and review manipulation.
Cass-Gottlieb said digital platforms need to do more to prevent their users from being scammed.
“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 malicious apps,” she said.
“We also need more action against fake reviews from platforms whose services contain ratings and reviews, including those on search, social media, app stores and online marketplaces.
“These problems have been exacerbated by a lack of dispute resolution options for consumers and small businesses, who often simply give up seeking redress because they can’t get the digital platforms to properly consider the issue.”
The ACCC’s report recommends new laws requiring digital platforms to:
- provide easy-to-use processes for reporting scams, malicious apps, and fake reviews, and for responding to such reports
- reduce the risk of scams by verifying certain business users such as advertisers, app developers and sellers
- publish review verification processes to provide important information to readers of online reviews to help them assess the trustworthiness of reviews on the platform
- reporting on scams, malicious apps and fake reviews of their services, and the measures taken to address them
- ensure that consumers and small businesses have access to appropriate dispute resolution, supported by the establishment of a new ombudsman scheme for digital platforms.
The ACCC chair argues that major digital platforms have the ability and incentive to engage in anti-competitive behavior, including favoring their own services or imposing tie-in schemes, such as smartphones pre-loaded with a particular bundle apps.
Cass-Gottlieb said the ACCC wants to see a new regulatory regime in addition to existing competition laws to address anti-competitive behavior, unfair treatment of business users and barriers to entry and expansion by potential rivals.
“We advocate for service-specific codes of conduct that apply to designated digital platforms,” she said.
“This would ensure that the obligations appropriately address certain 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.”
New federal treasurer Jim Chalmers was presented with the report on Sept. 30. Commenting on the publication of the report by the ACCC last week, he said the government is considering the ACCC’s recommendations and will consult publicly on the proposals.
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