Britain’s biggest banks are demanding that Facebook, Google and telecom giants pay hundreds of millions of pounds to help reimburse victims taken in by scammers on social media. Barclays, TSB, Lloyds and Santander have warned that technology companies are not shouldering their share of the burden from the wave of online fraud gripping Britain.
They are backing a so-called “polluter pays” principle in which tech companies would be required to contribute to a compensation war chest for victims.
At present, banks sign up to a voluntary code to reimburse people who lose their life savings if they are taken in by criminals and the money cannot be recovered. Around £462m was returned to customers in 2020 and 2021.
Facebook, Instagram, Google and telecom companies currently pay nothing towards losses, despite more than three quarters of scams taking place on social media, auction sites or dating apps, according to Barclays data.
Writing for the Telegraph, Sian McIntyre, head of economic crime at the bank, said: “We would like to see a cross-sector pot funded by a polluter pays principle.
“Those companies that enable scams on their platforms or services should be putting money into that pot.”
Victims lost £583m last year to so-called authorised push payment fraud, where criminals use calls, texts, emails, fake websites and social media posts to dupe victims into handing over personal details and money. Losses were up more than a quarter compared with 2020.
Ms McIntyre added: “A text message from a scammer is enabled by a telecom service and if a victim clicks on the fraudulent link this is facilitated by an internet service provider.
“If a customer clicks on a criminal advert on social media this will be hosted by a tech firm and when the victim parts with their funds their bank should attempt to block transactions.
“All companies and sectors involved in enabling scams should be mandated to regularly publish their data, including what action they are taking, and contribute to victim compensation.”
Some high-street banks have signed a voluntary industry agreement to reimburse “blameless” customers who fall victim to scams, but refund rates are low. Of the £583m lost last year, less than half was returned to customers.
Paul Davis, director of fraud at TSB, said “partial or total” funding from internet and technology giants towards fraud losses was “long overdue”.
Mr Davis said: “Authorised fraud doesn’t start and end with banks, other sectors play a role in facilitating it. The steps some tech giants have taken to help prevent scams are welcome, but they also need to help with the cost.”
TSB offers a refund guarantee on most fraud losses, reimbursing 98pc of victims. Mr Davis said: “Not only is this the right thing for victims, it is also an incentive for us to stop fraud from happening in the first place.
“Until we see that same incentive amongst technology companies then they won’t do all they can to stop scams on their platforms.”
Liz Ziegler, financial crime director at Lloyds, said where fraud could not be prevented, big tech should consider with “industry and government whether they have a role to play in reimbursement”.
Chris Ainsley, head of fraud risk management at Santander, said: “It won’t be straightforward to get all stakeholders to share their scams data and work out a reimbursement model, but the fight against fraud won’t be able to move forward without it.”
A spokesman for UK Finance, the banking trade body, backed calls for online platforms and phone providers to help reimburse victims, but said companies should first and foremost “stop fraud at source”.
In recent years Google has come under sustained fire from the Financial Conduct Authority (FCA) for not doing enough to prevent fraudulent investment adverts on its search engine.
Last year the tech business pledged millions of pounds to run anti-fraud campaigns on its search engine.
Both Google and Meta, Facebook and Instagram’s parent brand, said they now require most financial services adverts on their sites to be authorised by the FCA, and that they take the safety of their users seriously.
Big tech must pay its fair share in the fight against scammers
By Sian McIntyre
What if the key to fighting scams lay in the parable of the blind men and the elephant?
In the story, a group of blind men each inspect an elephant by touch. One holds the creature’s trunk and says it must be a snake, while another touches its leg and insists it’s a tree. A third grabs the animal’s tail and claims he’s got a piece of rope, and the last man presses its side and concludes they’ve hit a wall.
The elephant is a symbol of the growing scams epidemic, and the men are all the different industries trying to make sense of it.
The United Kingdom is now seen by many as a global centre for fraud, with authorised push payment scams (which is when victims are tricked into making a payment to a fraudster) reaching a record high of £538.2m in 2021, according to figures from UK Finance.
In a world where so much of what we do is online, criminals are adapting to an ever evolving digital environment and finding new ways to defraud innocent victims.
In fact, Barclays’ most recent data shows that most scams (77pc) happen on tech platforms such as social media, purchase/auction sites, or dating apps.
It’s easy to assume that scams only involve three parties – scammers, their victims, and banks — but in reality there are a number of sectors involved. And as scams occur across many different sectors, they’re becoming increasingly more difficult to track and have oversight of.
For example, when a victim first receives a text message from a scammer, this will be enabled by a telecom service. If they then click on the fraudulent link contained within the text, it is facilitated by an internet service provider. If a customer engages with a criminal posting on social media, this will be hosted by a tech firm.
Finally, when the victim parts with their funds – experiencing a monetary loss – it will be their bank that attempts to block these transactions or return their money.
Despite the vast array of touchpoints where the scammer and victim interact, it is currently just banks, at this final step, that offer policymakers and law enforcement enough insight into scams and how to tackle this problem.
We propose a solution: all companies and sectors involved in enabling scams – including large tech firms – should be mandated to regularly publish their data, including what preventative actions they are taking.
Policymakers, regulators and stakeholders across all industries need this data to understand how and where scams are occurring. Without this we’re blind and won’t be able to coordinate a better response.
If we work together to communicate our data and insights seamlessly, we’ll be able to see the bigger picture – not just disparate bits and pieces that don’t make sense alone.
Having said this, we believe that the reimbursement of victims is just as important as scam prevention.
This is why we would like a cross-sector pot to be established to fund the reimbursement of victims, based on a ‘polluter pays’ principle by which those companies that enable scams to occur on their platforms or services should provide funding for the pot.
Ultimately, the Government, regulators and all sectors need to come together as part of a collaborative effort to tackle this shared problem at its very source. We’re all victims of scammers, and we will never be able to eliminate this epidemic unless we work together to collectively protect individuals, businesses and the economy as a whole.
Scammers might be smart. But together, we can be smarter.
Sian McIntyre is head of economic crime at Barclays
