Did you know? The New South Wales Government recently passed new legislation to ban “claim farming”, a practice in which a third party “farmer” approaches a potential civil liability claimant and pressures them to make a compensation claim, then sells their target’s information to an interested party for financial gain.
How claim farming works
Potential claimants are usually contacted without their consent, for example by cold calling or email, and may be subject to tactics such as harassment, promises of unrealistic payouts, or false assurances that the “farmer” has contacted them on behalf of an insurer or government agency.
Information about a potential claimant is usually sold to a law firm, for up to thousands of dollars in referral fees. While the farmer profits from the referral and the law firm stands to receive legal fees for making the claim, a genuine claimant may be left with far less than what they otherwise might have been entitled to receive. Guardian Australia reports that the fees for one ‘survivor advocacy group’ were as high as $14,000, and that referral fees have even been billed to some claimants themselves as disbursements.
Claim Farming Practices Prohibition Act 2025
In a concerning trend, survivors of child abuse have become targets of claim farming. In relation to the Claim Farming Practices Prohibition Act 2025, Jennifer Ball, President of the Law Society of NSW has said “The Law Society supports the introduction of legislation to ensure that victim-survivors of abuse are protected from the exploitative practices of claim farmers. This is unacceptable conduct, particularly in circumstances where victim-survivors are unaware of the free legal options available to them.”
The legislation introduces fines of up to $55,000 for soliciting, buying or selling a claim, and is targeted to claims arising under the Civil Liability Act 2002 and intentional torts.
Other Jurisdictions
NSW joins Queensland in legislating against claim farming, while other Australian states including South Australia and Western Australia have introduced draft legislation targeting the practice. In 2019, Queensland was the first Australian state to make anti-claim farming reforms (initially focused on the motor accident insurance space). Then, in 2023, it became the first Australian jurisdiction to successfully prosecute a claim farming offender with the Brisbane Magistrates Court fining Accident Management Solutions $1 million for more than 90 offences. His Honour, Magistrate Saggers, described the offending as “serious”, “planned” and “cynical”, and warned that “Companies in the industry and individuals within it and within our own profession must be dissuaded from embarking in these type of arrangements and risking investigation or prosecution. This deterrent serves the interests of the community.”
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