The news: UK banks are demanding that Big Tech chips in on fraud victim reimbursement, per The Telegraph.
What are banks saying? Major UK banks including Lloyds, Barclays, TSB, and Santander are specifically calling out Facebook, Google, and other tech and telecom giants for their role in online fraud. The banks believe that the “polluter pays” principle should require these companies to pay into a communal account that reimburses online fraud victims.
- Currently, banks in the UK that have signed and agreed to abide by a code issued by the Lending Standards Board voluntarily reimburse victims.
- The “polluter pays” principle would require firms in other sectors that contribute to the facilitation of the fraud to chip in toward reimbursement. For example, a telecom company that allowed fraudulent web links to circulate via text, or a social media company that ran a fraudulent investment ad, would be required to pay into the pot.
Can fraud be stopped? According to Barclays, more than three-quarters of online scams occur on social media, auction sites, and dating sites. Executives at Barclays and at other banks say tech companies involved in the facilitation of the scams should be required to report data on the scams that they identify on their platforms. But the banks also say that the primary goal should be to prevent fraud from happening in the first place.
- Banks argue that the lack of a requirement for companies in other sectors to contribute toward the reimbursement gives those companies no incentive to stop the scams from circulating.
In the UK, Google and Facebook parent company Meta say they don’t run financial advertisements on their platforms unless they’re approved by the Financial Conduct Authority (FCA).
The bigger picture: For quite some time, banks have been sounding off on the need for companies in other sectors to pitch in on fraud reimbursement. But now they’re taking a more pointed approach and naming specific companies that should be required to chip in.
- Earlier this month, UK trade group UK Finance reported that £1.3 billion ($1.8 billion) was stolen through fraud and scams during 2021, up an alarming 39% from the previous year.
- In May, the UK introduced the Financial Services and Markets Bill, which, if enacted, would allow regulators to require banks to reimburse victims of authorized push payment (APP) fraud.
