TSB has urged the government to hold social media companies to account for online fraud, after compensation measures were dropped in a new UK fraud strategy.
The bank said more than 80 per cent of all purchase, investment and impersonation fraud affecting its customers involved scams that took place through Meta-owned Facebook, WhatsApp and Instagram.
The government’s fraud strategy, published on Wednesday, scrapped plans to force tech companies to compensate victims of online financial scams.
Ministers have instead announced plans for a voluntary “online fraud charter”, which the government said it would agree with companies this summer. Fraud experts said the strategy failed to force tech companies to the table.
“Social media companies must urgently clean up their platforms to protect the countless innocent people who use their services,” said Paul Davis, TSB’s director of fraud prevention. He said tech companies should be required to bear the financial cost of fraud linked to activity on their platforms.
The lack of measures targeting social media will weaken fraud provisions, according to critics who say the bulk of scams are now committed online.
TSB’s data echoes similar findings from Barclays UK, where more than three-quarters of scams originate on tech platforms. Action Fraud previously reported that about 80 per cent of all cases it handled related to online fraud.
Several types of fraud have grown fast online. Impersonation fraud, for example, is where a scammer pretends to be a trusted official to gain access to personal details. Purchase fraud involves the listing of non-existent products for sale online.
Wednesday’s fraud strategy was also attacked over the extent to which it emphasised new reporting tools, such as a replacement for the underperforming Action Fraud service, rather than preventative measures to tackle the crime.
Senior executives at several lenders singled out products owned by Meta as vectors for fraud. Digital bank Starling pulled advertising from Meta’s platforms in December 2021 over concerns that 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 to block scams, financial services advertisers now have to be FCA authorised and we run consumer awareness campaigns on how to spot fraudulent behaviour.”
Stop Scams UK, a group backed by 21 big banks and telecoms groups including Meta, said developments fell short of a “single scams authority” proposed by industry and consumer groups. The group has played a prominent role in lobbying tech companies to address fraud.
“It’s about the coordination of policy in response to fraud, linking up things like privacy law, bringing together departments,” said Simon Miller, policy director at SSUK. He also said that improved data sharing between companies would help prevent fraud.
Separately, the online safety bill moving through the House of Lords will impose a “duty of care” on large 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 having pledged in 2019 to refund any of its 5mn-plus customers who have been victims of online fraud.
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