Prime Minister Rishi Sunak is facing pressure from banks to force tech companies to foot the bill for online fraud.
Leaders of the UK’s biggest banks have written to the Prime Minister demanding that tech companies do more to stop online fraud emanating from their platforms.
Last week, a letter written to Meta by the CEO of TSB called on the social media giant to do more to prevent online fraud emanating from its platforms.
According a Sky News reportCEOs of nine of the UK’s biggest financial institutions, including Barclays, TSB and Nationwide, wrote to Sunak warning him that the UK was “a global hotspot for fraud and scams”.
Banks told Sunak that £2,300 was stolen from UK consumers every day last year by fraudsters.
They warned that they could take action themselves if the government does not intervene, including slowing the processing of payments, which they described in the letter as “a useful but brutal instrument which means that some customers and companies will have their legitimate transactions blocked”. .
Scams such as authorized push payment (APP) fraud occur when consumers are tricked into making payments to fraudsters through platforms such as fake websites and messages, which often emanate from social media.
APP fraud caused losses of $789.4 million to British citizens in 2021, which could reach $1.56 billion by 2026, according to a report by payment software provider ACI in the world and analysis firm GlobalData.
Although the banks use the latest security systems and adhere to strict regulations, the fraudsters manage to commit these crimes because the payments are authorized by the users of the account, which means that they pass through the banking security systems. But it is the banks that are mandated to reimburse customers.
Earlier in June, the payment systems regulator did obligation for victims of authorized push payment (APP) fraud to be reimbursed within five days.
In response to the TSB CEO’s letter last week, a spokesperson for Meta said in a statement: “This is an industry-wide issue and scammers are using methods more more sophisticated ways to scam people in a variety of ways including email, text and offline. We don’t want anyone to fall victim to these criminals, which is why our platforms already have systems in place to block scams, financial services advertisers must now be licensed by the FCA to target UK users and we are running consumer awareness campaigns on how to spot fraudulent behavior People can also report this content with a few simple clicks and we are working with the police to support their investigations.
But, in the letter to Sunak, the banks said they wanted the tech companies to stop fraud on their platforms and help reimburse victims. They also called for a public record showing the tech giants’ failure to stop scams.
The letter warned that the high level of fraud “is having a significant impact on the attractiveness of the wider UK financial sector to overseas investors, which as we know is essential for the health of the City of London and the wider British economy”.
In 2021, Anne Boden, founder of digital challenger Starling Bank, called for cooperation between different sectors to crack down on APP fraud.
In a blog post At the time, Boden said other industries needed to take some responsibility for APP scams, especially social media platforms. “Banks are investing billions of pounds into fighting economic crime, but we can’t stop it alone,” she wrote.
“Very often, [social media] accounts are used to advertise for ‘silver mules‘ for purposes of money laundering, selling stolen identity data and credit cards, phishing, fake investment scams and identity theft.
Boden said the banks “seem to have become the underwriter of all sorts of frauds that aren’t financial frauds at all.”