UK Finance, which represents more than 300 companies, has written to the chancellor, Jeremy Hunt, requesting that ministers make tech companies take responsibility for payment fraud on their platforms. Specifically, the lobby group is pointing the finger at Meta, which it claims is connected to over 60% of all push payment fraud.
An Authorised Push Payment (APP) scam, also known as bank transfer fraud, is a type of scam in which fraudsters trick individuals or businesses into authorising the transfer of funds from their bank accounts to accounts controlled by the criminals.
It typically involves social engineering techniques to deceive victims into believing that they are making legitimate payments or transfers. These include tactics such as brand impersonation, too-good-to-be-true crypto deals, online romances, overdue fines, or “relatives” asking for money.
As the victim is the one who initiates the payment, banks in most countries are reluctant to reimburse the funds. Starting in 2024, the government will require UK banks to reimburse fraud victims that have been tricked into sending money to fraudsters.
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With the new rules looming on the horizon, it is understandable that the UK finance industry is pushing for tech companies to take more responsibility for financial online crime.
UK fraud strategy to “incentivise” online scam investigation
Promisingly, this was down 17% from the year prior, but fears are that the recent step-change in generative AI could help turbo-charge fraudulent tactics online and make scams more sophisticated.
The UK government announced a new national fraud strategy in May this year, but stopped short of forcing tech companies to pay compensation to victims of online scams. It did impose a “duty of care” on large platforms to protect users from fraud and other negative content.
The data in the letter from UK Finance, as first reported by the Financial Times, says that platforms owned by Mark Zuckerberg’s Meta — Facebook, Facebook Marketplace, Instagram, and WhatsApp — are the locations of 61% of all APP scams.
A spokesperson for the company told the FT that it is an industry-wide issue with scammers using increasingly sophisticated methods to defraud people in a range of ways, adding that Meta was working with the police to support their investigations.
According to the UK’s fraud strategy, tech companies must make it easy for users to report fraud on their platforms (“within a few simple clicks”). Furthermore, the strategy says it will “shine a light on which platforms are the safest, making sure that companies are properly incentivised to combat fraud.”
Depending on how the government will implement this measure, it would seem Meta has its work cut out for it. According to statistics from UK bank TSB earlier this year, when taking into account the three biggest three biggest fraud categories — purchase, impersonation, and investment fraud — as much as 80% occur on Meta’s platforms.