Tensions are escalating between banking and payment companies and social media firms in the U.K. over who should be liable for compensating people if they fall victim to fraud schemes online. Banks will now be required to start compensating victims of authorized push payment (APP) fraud up to £85,000 if they were tricked or psychologically manipulated into handing over the cash. The lower compensation amount was implemented following industry pushback on the initially proposed £415,000 reimbursement sum by the Payment Systems Regulator (PSR).
London-based digital bank Revolut accused Meta of not doing enough to tackle fraud globally, prompting a call for social media platforms to share in the cost of reimbursing fraud victims. This is not a new proposal, as tensions have been ongoing between banks and tech companies, with the Labour Party reportedly drafting proposals to mandate tech firms to reimburse victims of fraud originating on their platforms. It remains unclear if the government has plans to require tech firms to pay compensation to victims of APP fraud.
Banks have been pushing for more collaboration from social media companies to combat the increasing and evolving threat of fraud online. Regulators and law enforcement have emphasized the need for tech firms to share more detailed intelligence on how criminals abuse their platforms. There has been a demand for social media firms to remove accounts involved in fraud attempts, but regulatory authorities have expressed frustration with the lack of action from tech companies in combating fraud.
Meta has defended itself against claims that it should be responsible for compensating victims of APP fraud, stating that banks should focus on collaboration rather than shifting liability for fraud. The company highlighted its Fraud Intelligence Reciprocal Exchange (FIRE) initiative, which facilitates the exchange of live intelligence from big banks to improve fraud detection systems. Meta called for more cross-industry collaboration and encouraged banks, including Revolut, to join forces with them on their FIRE framework to protect users from fraud.
Overall, the debate on who should be liable for compensating victims of online fraud continues between banking and payment companies and social media firms. While banks have been mandated to provide compensation for victims of APP fraud, questions remain about the role and responsibility of tech companies in preventing and mitigating fraudulent activities on their platforms. Collaborative efforts, such as Meta’s FIRE initiative, are seen as a potential solution to combat fraud through shared intelligence and technology advancements. The issue of regulatory liability for tech companies is complex and ongoing, with no immediate resolution in sight.
