As more and more people in the UK fall victim to online scams, traditional banks, payments firms and social media companies are pitting themselves against one another to compensate victims of scams, not just in the UK but around the world. phenomenon. These are now being held accountable for preventing fraud and compensating victims, with UK banks required to compensate victims of authorized payment fraud (APP fraud) from 7 October, with compensation capped at £85,000.

(For more information on the definition of APP fraud, please see)

"Authorization payment fraud" is a common scam in which criminals impersonate a trustworthy person or business and trick victims into sending money to them. With the rise of digital payments and social media platforms, this type of fraud has become increasingly common. Controversy continues over who should bear the responsibility for victim compensation costs, banks or technology companies that condone fraud.

UK forces banks to compensate, causing dissatisfaction among banks

CNBC reported that under new regulations, banks must now compensate victims of “authorization payment fraud”, with compensation capped at £85,000. This is a reduction from the £415,000 compensation cap originally proposed by the UK's Payment Systems Regulator (PSR). The move follows opposition from the industry, which is concerned that higher compensation levels will put excessive financial pressure on banks and payment service providers.

However, even a cap of £85,000 is a significant financial liability for banks, raising questions about why they bear the majority of the liability for fraud, especially as fraud often starts on social media platforms Down.

Revolut takes on Meta: Asking tech companies to take on more

British digital bank Revolut publicly criticized the policy. On Thursday, Revolut accused Meta, Facebook's parent company, of failing to do enough to combat fraud.

Woody Malouf, head of financial crime at Revolut, believes social media platforms should take more responsibility for compensating victims of scams. He said tech companies currently "don't have any incentive to take action" because they don't have to share the responsibility or costs. This isn't a new idea; the financial industry has long pushed to hold tech companies financially responsible for fraud on their platforms.

(Telegram founder Pavel Durov was indicted for a felony: assisting illegal transactions and organized crime, with a maximum sentence of ten years)

UK launches tech company liability proposal

In June, the UK Labor Party introduced a proposal to hold tech companies accountable and liable for compensation for victims of scams on their platforms. However, it is unclear whether the proposal will become policy, as the British government has not made an official position on it.

Commercial litigator Matt Akroyd said the new £85,000 compensation cap was a win for banks, but they were also campaigning for further regulatory changes to extend liability to technology companies. However, Akroyd warned that developing a regulatory regime that would include non-payment system-related companies such as social media is complex and may take time to resolve.

Banks and technology companies should be promoted to strengthen cooperation

The rise of digital platforms has greatly contributed to the surge in online fraud. Banks and regulators are also pressuring technology companies to cooperate more in identifying and combating fraud. At this year's UK financial industry event, regulators highlighted that most scams originate from social media platforms.

Kate Fitzgerald, director of policy at PSR, believes technology companies need to be transparent. She said: "There needs to be absolute transparency about the circumstances in which fraud occurs so that regulators can focus their efforts in the appropriate places." The authorities also called on social media companies to be more active in removing information related to fraud. Accounts associated with fraudulent activity.

Rob Jones, director of the UK's National Economic Crime Center, criticized technology companies for their ineffectiveness in combating fraud. He said: "The missing part is that large social media companies proactively delete accounts suspected of being related to fraud." He added that changes in technology companies' efforts to combat fraud Fraud practices remain challenging.

Meta’s position: Oppose compensation, call for cross-industry cooperation

Tech giant Meta has objected to proposals for liability for "authorized payment fraud." In written testimony to a parliamentary committee, Meta argued that UK banks were too focused on shifting responsibility to other industries, which could be beneficial to fraudsters. Meta advocates a collaborative approach, recommending that banks and technology companies work together to share intelligence and jointly combat fraud.

Meta has launched its Fraud Intelligence Reciprocal Exchange (FIRE) program, which uses real-time information from banks to enhance its fraud detection systems with machine learning and AI. Meta calls for more cross-industry collaboration and encourages financial institutions, including Revolut, to join the FIRE framework to improve data exchange capabilities and jointly combat fraud.

There are ongoing efforts among banks, technology companies and regulators to combat online fraud, and it remains to be seen whether monetary liability will be evenly distributed among these areas in the future.

This article Who is responsible for Internet fraud? Banks and Facebook condone fraud and ignore it, and the British government forces businesses to compensate. First appeared on Chain News ABMedia.