Meta is facing calls from UK banks and payments companies such as Revolut to provide financial compensation to people who have been defrauded by its services.
Jaap Ariens | Nurphoto (via Getty Images)
Tensions are rising between Britain’s banking and payments companies and social media companies over who will be liable for compensation if you fall victim to online fraud.
From October 7, banks will be required to start paying victims of so-called authorized push payment (APP) fraud up to £85,000 if they are tricked or manipulated into handing over their cash.
APP fraud is a type of fraud in which criminals impersonate individuals or businesses selling services in an attempt to persuade people to send money.
A repayment of £85,000 could be expensive for large banks and payment companies. However, it is actually lower than the mandatory redemption amount of £415,000 previously proposed by the UK’s Payment Systems Regulator (PSR).
PSR withdrew its high maximum compensation offer following industry backlash, particularly from industry group the Payment Services Association, which argued it was too high for the financial services sector to bear.
However, with compulsory fraud cover now in place in the UK, questions are being raised about whether financial companies are bearing the brunt of the cost of supporting fraud victims.
On Thursday, London-based digital bank Revolut was indicted. meta About how there is a “massive lack of what is needed to combat fraud around the world.” The Facebook owner announced a partnership with a British financial institution earlier this week. natwest and Metrobank share information about fraudulent activities that occur on their platforms.
Woody Maloof, Revolut’s head of financial crime, said Meta and other social media platforms should cover the costs of repaying fraud victims and that by not sharing responsibility, “they don’t have anything to say about it.” There is no motivation to do so.”
Revolut is not new for major technology platforms to seek financial compensation for people who have been defrauded on their websites or apps.
Proposals to hold tech companies accountable
Tensions have been rising between banks and technology companies for some time now. Online fraud has increased dramatically in recent years as the use of digital platforms to pay others and purchase goods online has accelerated.
In June, The Financial Times reported Labor has revealed that it has drafted proposals to force technology companies to compensate victims of fraud caused by their platforms. It is unclear whether the government will continue to require technology companies to pay compensation to victims of APP fraud.
A government spokesperson did not respond to CNBC’s request for comment.
Matt Ackroyd, a commercial litigation lawyer at Stewarts, told CNBC that following the victory in lowering the maximum reimbursement limit for APP fraud to £85,000, banks would be “incentivized if they lobbied the government to take on some regulatory responsibility. “We will receive further support,” he said. High-tech companies are also successful. ”
However, he added: “The question of how any regulatory regime can cover companies that do not play an active role in the PSR payment system is complex, and this issue is unlikely to be resolved anytime soon. It means,” he added.
More broadly, banks and regulators have long urged social media companies to work more closely with UK retail banks to combat the rapidly growing and ever-evolving threat of fraud. A key request for tech companies was to share more detailed information about how criminals are exploiting their platforms.
At a UK financial industry event focused on economic fraud in March 2023, regulators and law enforcement agencies highlighted the need for social media companies to do more.
Kate Fitzgerald, head of policy at PSR, told attendees at the event: “We’ve heard anecdotally from every company we spoke to today that the vast majority of this fraud is emanating from social media platforms. “It was,” he said.
He added that there needs to be “absolute transparency” about where fraud is occurring so regulators can know where to focus their efforts in the value chain.
At the event, regulators also complained that social media companies were not doing enough to combat and eliminate attempts to deceive internet users.
Rob Jones, director of the National Economic Crime Center, part of the UK’s National Crime Agency, said at the event: “What’s missing is the large social media companies taking down accounts suspected of engaging in fraud. That’s true.”
Jones added that it’s difficult to “break through the inertia” of tech companies and “get them to actually do it.”
High-tech companies promote “cross-industry collaboration”
Meta has pushed back on suggestions that it should be responsible for paying compensation to victims of APP fraud.
In written evidence to a parliamentary committee last year, the social media giant said UK banks were “too focused on efforts to shift responsibility for wrongdoing onto other industries” and that this was creating “intractably hostile “We are creating a safe environment,” he added. About scammers. ”
The company said it can harness live intelligence from major banks through its Fraud Intelligence Reciprocal Exchange (FIRE) initiative to stop fraud and evolve and improve its machine learning and AI detection systems. Mr Mehta called on the government to “further encourage such cross-industry collaboration”.
In a statement to CNBC on Thursday, the tech giant said banks, including Revolut, should consider working with Meta on the FIRE framework to facilitate data exchange between the company and large financial institutions. He emphasized.
FIRE is “designed to allow banks to share information so they can work together to protect the people who use their services,” a Meta spokesperson said last week. “Fraud is a multi-disciplinary problem that can only be addressed by working together.”
