SIM-only telco Circles.Life will pay out more than $300,000 in fines and compensation, after breaking industry rules designed to protect customers against identity theft scammers.
The Australian Communications and Media Authority (ACMA) hit Circles.Life with almost $200,000 in penalties, after an investigation found that the telco had failed to run the required identity checks for phone number transfers between August and December 2021. The ACMA logged 1,787 rule breaches, which it says resulted in 42 customers experiencing fraud-related issues, seven of whom also suffered financial losses.
ACMA: Circles.Life’s failure caused ‘significant stress’ to customers
The ACMA introduced new industry rules to combat number porting scams back in 2020, which require telcos to use multi-factor identification and identity checks to protect customers. However, it seems Circles.Life failed to effectively implement these checks when accepting number transfers, resulting in affected customers experiencing compromised personal info and loss of access to sensitive data such as online banking.
ACMA Chair Nerida O’Loughlin said that anti-fraud rules have been highly successful since their introduction, but telcos are still responsible for following policy to keep customers safe.
“It is deeply concerning that Circles.Life did not have proper processes in place for such a long period and that so many people were affected or put at risk of identity theft and fraud,” Ms O’Loughlin said.
“Combatting these types of scams requires concerted action by all telcos and one weak link exposes all consumers to harm.”
The ACMA has subsequently issued Circles.Life with a $199,800 infringement notice, which the telco has since paid. Circles.Life has also offered compensation of over $100,000 to impacted customers.
New rules to protect consumers from scams that target customer interactions with telcos come into force today. The rules apply for telcos undertaking high risk transactions such as SIM-swap requests, changes to accounts or disclosure of personal info. https://t.co/0h2Q15VcAc pic.twitter.com/sVcOCWQtBs
— ACMA (@acmadotgov) June 30, 2022
In addition to offering compensation, Circles.Life also responded quickly once the fraudulent number transfers were discovered and appointed regulatory staff to oversee its policies going forward. However, with stopping telco scams a big focus for the ACMA in 2022, it’s no surprise that the industry body is cracking down on telcos who fail to meet compliance standards.
“It is the customers of other telcos who have fallen victim in this case by having their number transferred to Circles.Life without their knowledge,” said Ms O’Loughlin.
“Some of the victims have experienced significant stress due to Circles.Life’s failure and we are pleased to see the company is providing recompense to acknowledge the profound emotional toll and disruption often caused by these scams.”
An SIM-only postpaid provider operating on the Optus network, Circles.Life offers a small range of low-cost, data-focused plans, with frequent new customer discounts and bonuses. The telco recently announced an 18-month price freeze on all plans for customers who sign up before August 31, 2022, in response to phone plan price hikes by Telstra and Optus.
What is a number transfer scam?
The ACMA has made fighting SIM-swap or number transfer fraud a priority, introducing new customer identity authentication rules in June of this year. The updated rules will build upon policies outlined in 2020 that require telcos to use multi-factor authentication to identify customers, and will also give the ACMA stronger enforcement powers when telcos are non-compliant.
Number transfer fraud occurs when a scammer convinces a telco to port a customer’s phone number to a new SIM, giving the scammer access to that person’s calls and text messages. Scammers may then gain access to passwords and account details for applications such as online banking, which often requires two-factor authentication via SMS for transactions or password resets.
According to the ACMA, SIM-swap victims lose around $28,000 on average when scams are successful. While the onus remains on mobile providers to protect customers and ensure compliance with ACMA rules, it’s important for customers themselves to keep an eye on their accounts, and raise the alarm immediately if something doesn’t look quite right.
If you’ve been hit by a SIM-swap or number transfer scam – or any form of identity theft – you should follow the below steps to protect your data and finances.
- Contact your bank or financial institution immediately to report the scam. Your bank may be able to stop or reverse a transaction, and close your account or credit card.
- Contact IDCARE online or by calling 1800 585 160. This is a free, government-funded service that can support you through identity theft.
- Change any online passwords that may have been compromised, including banking, email, and social media accounts.
- In the case of SIM-swap and porting scams, you should also contact your mobile provider.
- You may also wish to report the scam to the ACCC here.
More information about preventing and reporting scams is available from the ACCC’s ScamWatch service.