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Tensions are rising between banking and payment companies in the U.K. and social media firms over who should bear the financial responsibility for compensating individuals who fall victim to online fraud schemes. Banks will soon be required to compensate victims of authorized push payment (APP) fraud up to £85,000 if they were deceived or emotionally manipulated into transferring money. This type of fraud involves criminals impersonating legitimate entities to trick people into sending them money.
The £85,000 reimbursement cap could be a significant financial burden for large banks and payment firms, although it is lower than the previously proposed £415,000 compensation amount by the Payment Systems Regulator (PSR). Following industry pushback, the PSR reduced the maximum compensation payout, citing the high cost for the financial services sector.
As the mandatory fraud compensation is being implemented in the U.K., discussions are ongoing about whether financial institutions are shouldering the majority of the cost to assist fraud victims. Digital bank Revolut criticized Meta, the owner of Facebook, for not adequately addressing global fraud issues. Meta recently partnered with U.K. lenders NatWest and Metro Bank to share intelligence on fraud activity on its platforms.
Revolut’s head of financial crime, Woody Malouf, urged social media platforms like Meta to contribute to compensating fraud victims, stating that without shared responsibility, these platforms lack the incentive to address the issue. The debate over liability for fraud compensation has been ongoing, with proposals for tech firms to reimburse victims of fraud originating on their platforms.
Regulators and law enforcement highlighted the need for social media companies to increase collaboration with retail banks to combat the escalating fraud threat. While there are calls for tech firms to take more responsibility, Meta defended its position, emphasizing the importance of cross-industry collaboration to combat fraud effectively.
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Emily Jensen, graduated from the London School of Economics and Political Science (LSE) in the UK in 2015 with a degree in Economics. She specializes in financial markets and international trade. After graduating, she worked as an analyst at an investment bank in London, where she developed expertise in global economic trends. She later transitioned into consulting, focusing on fintech ventures and providing insights into global economic developments. Emily is passionate about the intersection of finance and technology and aims to drive innovation in the financial sector.
