TSB has urged the government to hold social media companies accountable for online fraud, after compensation measures were dropped in a new UK fraud strategy.
The bank said that more than 80% of all purchase, investment and impersonation frauds affecting its customers involved scams that occurred via Meta-owned Facebook, WhatsApp and Instagram.
THE government fraud strategyreleased Wednesday, it scrapped plans to force tech companies to compensate victims of online financial scams.
Ministers instead announced plans for a voluntary “online fraud charter”, which the government said it would agree with businesses this summer. Fraud experts said the strategy failed to force tech companies to the table.
“Social media companies urgently need to clean up their platforms to protect the countless innocent people who use their services,” said Paul Davis, director of fraud prevention at TSB. He said tech companies should be required to bear the financial cost of activity-related fraud on their platforms.
The lack of measures targeting social media will weaken fraud provisions, according to critics who say most scams are now being committed online.
TSB’s data echoes similar findings from Barclays UK, where more than three-quarters of scams originate on technology platforms. Action Fraud previously reported that approximately 80% of all cases handled involved online fraud.
Different types of fraud have grown rapidly online. Impersonation fraud, for example, is where a scammer pretends to be a trusted official to gain access to personal data. Shopping fraud involves listing non-existent products for sale online.
Wednesday’s fraud strategy was also attached on the extent to which it emphasized new reporting tools, such as a replacement for Action Fraud’s underperforming service, rather than preventative measures to tackle crime.
Senior executives at several lenders have identified Meta’s proprietary products as vectors of fraud. Digital bank Transfer pulled advertising from Meta’s platforms in December 2021 over fears the tech giant had done little to protect consumers from fraud.
Meta said: “We don’t want anyone to fall victim to these criminals, which is why our platforms have systems in place to block scams, financial services advertisers now need to be licensed by the FCA and we run consumer awareness campaigns on how to spot fraudulent behavior. “
Stop Scams UK, a group backed by 21 major banks and telecoms groups including Meta, said the developments fell short of a “single scam authority” proposed by industry and consumer groups. The group played a prominent role in lobbying tech companies to tackle fraud.
“It’s about coordinating policy in response to fraud, linking things like privacy law, bringing departments together,” said Simon Miller, policy director at SSUK. He also said that better data sharing between companies would help prevent fraud.
Separately, the online safety bill due to pass through the House of Lords will impose a “duty of care” on big tech platforms to protect users from fraud and other negative content.
Currently a number of lenders are part of a voluntary scheme offering compensation, with TSB pledging in 2019 to reimburse all of its more than 5 million customers who were victims of online fraud.
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