Tensions are escalating in the U.K. as banks and payment companies grapple with social media firms over who should bear the cost of compensating victims of online fraud. Starting October 7, banks will be required to reimburse up to £85,000 to victims of authorized push payment (APP) fraud, a scam where criminals trick people into sending them money.This could prove costly for large financial institutions.
While the mandatory reimbursement amount is lower than the initial proposal by the Payment Systems Regulator (PSR), questions remain about whether banks are shouldering an unfair burden.
Banks put the blame on Facebook, Instagram and other social media platforms
Revolut, a digital bank, has accused Facebook and Instagram parent Meta of failing to do enough to combat fraud and called for tech companies to contribute to compensation. This aligns with broader concerns that social media platforms are not taking sufficient measures to protect users from scams.
The government is considering proposals to force tech firms to reimburse fraud victims. However, determining a regulatory framework for companies that don’t play an active role in payment systems is complex.
Banks and regulators have long urged social media companies to collaborate more closely to combat fraud. They seek more detailed intelligence on criminal activities and faster removal of fraudulent accounts.
Social media firms argue that they are taking steps to address fraud, including through partnerships with banks and the use of advanced technology. They also emphasize the need for cross-industry collaboration.