Several major UK banks are calling on Tech giants to help reimburse fraud victims. However, from a legal point of view, the institutions are facing an impasse. Under the Online Security Act, responsibility for compensating victims lies exclusively with the banks.
Online fraud on the rise
While traditional banking scams have declined in recent years in the UK, this is not the case for payment fraud. UK Finance, an organization representing most of the banking industry, estimates that this type of fraud cost UK bank customers £580 million in 2021, up 40% year-on-year.
This is also true in France. In its latest annual report, the Observatoire de la sécurité des moyens de paiement (Payment Security Observatory) acknowledges the decline in fraudulent amounts, but calls for vigilance in the face of new fraudulent manipulations.
More recently, in a prevention guide aimed at the general public, the "Task Force" led by the Direction Générale de la Concurrence, de la Consommation et de la Répression des Fraudes (DGCCRF), pointed out that social networks have become veritable "hypermarkets" for the sale of fraudulent products, with an increase in Ponzi-type scams and fraudulent appeals for donations. These scams have been on the increase since the outbreak of the health crisis.
Among the most widespread scams is payment fraud via user notification, also known as "Authorized Push Payment". In this case, the payment is authorized by a legitimate user who sends money by wire transfer. While, by definition, anyone on social networks can be targeted by these scams, one of their specific features is that they are generally aimed at a young, over-represented audience.
State services and control authorities mobilize and publish a prevention guide against #arnaques!
- DGCCRF (@dgccrf) July 21, 2022
Consumers and professionals alike must remain vigilant and adopt the right reflexes to avoid the pitfalls!⚠
👉https://t.co/8oz1nlpsmE pic.twitter.com/bshSyMkAm9
British banks want to make Web giants pay
The UK's major banks want Google, Facebook and telecoms companies to help pay for online fraud, invoking the "polluter pays" principle.
The new Online Safety Bill introduced in the British Parliament last March already includes a series of measures designed to make these players more accountable.
In particular, it specifies that " the largest platforms will have to put in place proportionate systems and processes to prevent the publication or hosting of fraudulent ads on their service ".
However, reimbursement of victims is the sole responsibility of banking institutions in both the UK and France.
The banks, who want to make the Tech giants pay more in the face of rising reimbursements linked to online fraud, find themselves in a legal bind.