The head of UK Finance accuses tech companies of profiting from scams on their platforms
The CEO of UK Finance demands social media companies to reimburse victims of online fraud, alleging they profit from scams on their platforms. UK Finance’s fraud report reveals that 78% of authorized push payment scams, initiated online in the latter half of last year, with around 75% originating from social media.
David Postings, the CEO of UK Finance, emphasized that the banking sector is currently the only industry providing reimbursements. He believes that the responsibility should be shared, urging tech companies to contribute financially, especially considering their profiting from scams. While Postings welcomed the online safety bill’s provisions to remove scam advertisements, he criticized the government for not including reimbursement regulations for social media companies in its recently released fraud strategy.
He stated that if there is a system in place for reimbursing individuals, it is reasonable to expect tech companies to contribute. According to him, since these companies currently benefit financially from the occurrence of such fraud, it is unjustifiable.
In reaction to the UK Finance report released on Thursday, Paul Davis, the bank’s director of fraud prevention, emphasized the importance of social media companies and phone companies taking action to minimize fraud. He stated that these sectors should assume greater responsibility for ensuring the safety of their users.
The report also highlighted a significant rise in lost and stolen bank and credit card fraud in the previous year, attributed to the higher contactless spending limit of £100 per transaction and the growing acceptance of this payment method.
In 2022, the amount stolen through the use of lost and stolen cards experienced a significant surge of 30%, surpassing £100 million for the first time. The number of reported incidents also rose by 23%, reaching a total of 401,343 cases.
According to UK Finance, these increases were anticipated due to the elevated contactless limits implemented during the pandemic, along with the wider acceptance of contactless payments, which gained momentum during the Covid-19 lockdowns.
The contactless payment limit was more than doubled in October 2021, increasing from £45 to £100. Prior to this change, experts had cautioned that the expansion of the spending limit could expose consumers to a higher risk of fraud.
To enhance fraud prevention, cardholders are sometimes prompted to enter their PIN while conducting contactless transactions to verify card ownership. However, the frequency of this security measure varies among different card issuers.
According to the report, the overall losses from all forms of fraud decreased by 8%, amounting to £1.2 billion in 2022. Unauthorised fraud losses remained relatively stable at £726.9 million, experiencing a decrease of less than 1%. On the other hand, losses from authorised push payments reduced by 17% to £485.2 million.
While measures like two-factor authentication for online payments and confirmation of payee, where banks verify the recipient’s name, contribute to fraud reduction, UK Finance emphasized that a significant amount of money is still falling into the hands of criminals.
