Prime minister Rishi Sunak is facing pressure from banks to force tech firms to foot the bill for online fraud.
The leaders of the UK’s biggest banks have written to the prime minister demanding that tech companies do more to stop online fraud that emanates on their platforms.
Last week, a letter written to Meta by TSB’s CEO called on the social media giant to do more to prevent online fraud that emanates on its platforms.
According to a Sky News report, CEOs at nine of the UK’s largest financial institutions, including Barclays, TSB and Nationwide, wrote to Sunak warning that the UK was “a global hotspot for fraud and scams”.
The banks told Sunak that £2,300 was stolen from British consumers every day last year by fraudsters.
They warned that they may take action themselves if the government does not take action, including slowing down payment processing, which they described in the letter as “a useful but blunt instrument that will mean some customers and businesses will find their legitimate transactions held up”.
Scams such as authorised 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 $789.4m to UK citizens in 2021, which could rise to $1.56bn by 2026, according to a report from payments software supplier ACI Worldwide and analytics firm GlobalData.
Despite the banks using the latest security systems and adhering to strict regulations, fraudsters manage to commit these crimes because the payments are authorised by the account users, meaning they get through bank security systems. But it is the banks that are mandated to reimburse customers.
Earlier in June, the Payment Systems Regulator made it mandatory for victims of authorised push payment (APP) fraud to be reimbursed within five days.
In response to TSB CEO’s letter last week, a Meta spokesperson said in a statement: “This is an industry-wide issue and scammers are using increasingly sophisticated methods to defraud people in a range of ways, including email, SMS and offline. We don’t want anyone to fall victim to these criminals, which is why our platforms already have systems to block scams, financial services advertisers now have to be FCA authorised to target UK users and we run consumer awareness campaigns on how to spot fraudulent behaviour. People can also report this content in a few simple clicks and we work with the police to support their investigations.”
But, in the letter to Sunak, banks said they want the tech companies to stop fraud on their platforms and to contribute to refunds for victims. They also called for a public register showing the failure of tech giants to stop scams.
The letter warned that the high level of fraud was “having a material impact on how attractive the wider UK financial sector is perceived by inward investors, which as we know, is critical for the health of the City of London and wider UK economy”.
In 2021, Anne Boden, founder of digital challenger Starling Bank, called for cooperation between different sectors to clamp down on APP fraud.
In a blog post at the time, Boden said other sectors must shoulder some responsibility for APP scams, particularly social media platforms. “Banks invest billions of pounds in tackling economic crime, but we cannot stop it on our own,” she wrote.
“Very often, [social media] accounts are used for advertising for ‘money mules’ for the purposes of money laundering, selling stolen identity and credit card data, phishing, bogus investment scams and impersonation fraud.”
Boden said banks “seem to have become the underwriter of all kinds of fraud that are not really financial fraud at all”.