Tensions are rising between banking and payment companies and social media firms in the U.K. over who should compensate people if they fall victim to fraud schemes online. Banks will be required to reimburse victims of authorized push payment (APP) fraud up to £85,000 starting on Oct. 7. However, the Payment Systems Regulator (PSR) initially proposed a reimbursement amount of £415,000, which was met with industry backlash. Questions are now arising about whether financial firms are bearing the brunt of the cost for helping fraud victims, with calls for social media companies to share in the responsibility.
London-based digital bank Revolut accused Meta of not doing enough to tackle fraud globally, leading to tensions between tech platforms and financial institutions. Revolut’s call for social media platforms to financially compensate victims of fraud isn’t new, as proposals have been made to make tech firms liable for fraud that originates on their platforms. The government has not confirmed whether it plans to require tech firms to compensate victims of APP fraud. Commercial litigation experts believe that if banks can push the government to place regulatory liability on tech companies, it could be beneficial in the ongoing battle against fraud.
Banks and regulators have been urging social media companies to collaborate more with retail banks to combat the increasing threat of fraud. This includes sharing detailed intelligence on how criminals are using their platforms for fraudulent activities. A U.K. finance industry event in March 2023 highlighted the need for social media firms to do more to combat fraudulent activities on their platforms. Regulatory authorities have criticized social media companies for not being proactive enough in removing suspect accounts involved in fraud.
Meta has defended itself against calls to be held liable for compensating victims of APP fraud, arguing that banks are too focused on transferring liability to other industries. The company has emphasized the importance of cross-industry collaboration to combat fraud, using live intelligence from banks through the Fraud Intelligence Reciprocal Exchange (FIRE) initiative. Meta has called on banks to join forces with them on the FIRE framework to facilitate data exchanges aimed at protecting users. Collaboration between tech firms and financial institutions is seen as crucial in addressing fraud as a multi-sector issue that requires collective efforts.
Overall, the ongoing tensions between banking and payment companies and social media firms in the U.K. highlight the complex challenges of addressing online fraud and protecting consumers. While banks are now mandated to compensate victims of APP fraud, there are calls for tech companies to share the responsibility in combating fraud. The need for cross-industry collaboration and information sharing is emphasized by regulators and industry experts as a way to tackle the evolving nature of online fraud schemes. As the battle against fraud continues, finding ways for financial institutions and tech firms to work together effectively will be key to protecting consumers and maintaining trust in the digital economy.
