Tensions are rising between banks, payment companies, and social media giants in the U.K. as they clash over who should bear the cost of compensating victims of online fraud. Starting October 7, U.K. banks will be required to reimburse up to £85,000 to individuals who fall victim to authorized push payment (APP) fraud, where scammers convince people to send money under false pretenses. While this amount is lower than the £415,000 initially proposed by the Payment Systems Regulator (PSR), the financial burden still concerns major banks and payment firms.
APP fraud has become a growing problem, with criminals using impersonation tactics to deceive people into transferring funds. Despite the reduced compensation cap, questions remain about whether banks and payment firms are shouldering too much of the cost for protecting fraud victims.
Revolut, a London-based digital bank, has recently called out social media platforms, specifically Meta, for not doing enough to tackle fraud. Revolut's head of financial crime, Woody Malouf, criticized the tech giant, arguing that social platforms should share the financial responsibility for compensating victims of fraud that occurs on their networks. This comes after Meta partnered with U.K. banks NatWest and Metro Bank to share fraud intelligence, though critics like Revolut believe these efforts fall short of what’s needed.
The debate over liability is not new. Over the past few years, tensions have mounted between banks and tech companies as online fraud has surged, driven by the growing use of digital payment platforms. In June, reports surfaced that the U.K.’s Labour Party had considered legislation that would require tech firms to compensate victims of fraud originating on their platforms. However, there is no clarity on whether this proposal will move forward.
Financial experts are now watching closely as the discussion over fraud liability evolves. Matt Akroyd, a commercial litigation lawyer, suggested that banks might receive further support if their push for more regulatory liability on tech companies is successful. Yet, as he pointed out, regulating tech companies that don’t directly participate in the PSR’s payment systems is a complex issue that likely won’t be resolved soon.
Meanwhile, regulators continue to press social media platforms for greater collaboration with banks. At a U.K. finance industry event in March, authorities emphasized the need for social media firms to do more in combating fraud, including taking down fraudulent accounts more swiftly. While Meta has defended its efforts to fight fraud through initiatives like the Fraud Intelligence Reciprocal Exchange (FIRE), which enables data sharing with banks, it remains adamant that fraud is a multi-sector issue that requires broad industry collaboration.
As the rollout of the mandatory compensation scheme begins, the debate over who should bear the financial burden for fraud is far from over. Banks, payment firms, and social media companies are all key players in the fight against fraud, but with so much at stake, tensions between them continue to escalate.
