{"id":6610,"date":"2024-10-25T12:36:04","date_gmt":"2024-10-25T12:36:04","guid":{"rendered":"https:\/\/finderica.com\/social-media-must-do-more-to-tackle-payment-fraud-says-uk-regulator\/"},"modified":"2024-10-25T12:36:04","modified_gmt":"2024-10-25T12:36:04","slug":"social-media-must-do-more-to-tackle-payment-fraud-says-uk-regulator","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=6610","title":{"rendered":"Social media must do more to tackle payment fraud, says UK regulator"},"content":{"rendered":"
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Unlock the Editor\u2019s Digest for free<\/p>\n<\/div>\n

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Social media groups must do more in the \u201cwar of attrition\u201d against financial fraud on their sites, the UK payment regulator has said, adding ministers should consider making platforms liable for compensation to victims.<\/p>\n

David Geale, interim managing director of the Payment Systems Regulator, told the Financial Times that a new \u201cworld-first\u201d scheme forcing banks to reimburse victims was only the latest step in a \u201cconstant fight\u201d against fraudsters.<\/p>\n

\u201cI do think there is more that can be done around the point of origination in particular \u2014 that is social media, telcos and the internet more generally,\u201d Geale said. \u201cIt\u2019s a war of attrition\u2009.\u2009.\u2009.\u2009it\u2019s got to be a whole ecosystem approach.\u201d<\/p>\n

Geale\u2019s comments come after the regulator last week introduced rules to make payment providers liable for losses to authorised push payment (APP) fraud, where victims are tricked into sending money from their bank account, up to \u00a385,000. <\/p>\n

He said that introducing a levy on tech groups, forcing them to pay for the impact of scams or to fund law enforcement efforts, would be \u201cvery complicated\u201d, but it was \u201cone of the options that should be considered\u201d by the government.<\/p>\n

Labour earlier this year drafted plans to force tech companies to \u201ctake their proper share of the responsibility\u201d for tackling fraud and reimbursing victims. <\/p>\n

UK bank TSB said last year that 80 per cent of all cases in its three main fraud categories originated from one of Meta\u2019s social media services, including Facebook, WhatsApp and Instagram. Trade body UK Finance found 76 per cent of push payment fraud starts online.<\/p>\n

Geale said the PSR would publish data later this year on the origin of payment scams. \u201cIt will show there is a lot of fraudulent activity that comes through social media,\u201d he said, adding \u201ceveryone should have the responsibility to stop the fraud happening in the first place\u201d.<\/p>\n

He welcomed Meta\u2019s plans to expand a partnership with banks to share transaction data in an effort to prevent scams, announced this month, as a sign that social media groups were \u201ccoming to the party, to a certain extent\u201d.<\/p>\n

But he likened the problem to \u201cwhack-a-mole\u201d, as fraudsters that are blocked on one site \u201ckeep popping up\u201d elsewhere. Tech groups and banks sharing data with law enforcement would help to take criminals \u201cout of the system altogether\u201d, he noted.<\/p>\n

Britons lost \u00a3460mn to APP fraud last year, according to UK Finance. Some 70 per cent of this involved goods that were ordered online but not received. <\/p>\n

This is \u201ca lot of money affecting a lot of real people\u201d, said Geale, who called the losses \u201cdevastating\u201d in terms of both financial and mental impact.<\/p>\n

The new reimbursement rules follow an intense lobbying campaign by the payment industry, which argue that high compensation costs risk forcing some of the smaller fintechs out of business. <\/p>\n

After a backlash from former City minister Bim Afolami and the finance industry, the PSR slashed the compensation limit from \u00a3415,000 to \u00a385,000 just weeks before the policy was implemented.<\/p>\n

However, Geale, who is also the former Financial Conduct Authority\u2019s director of retail banking, rejected the idea that the PSR\u2019s U-turn came from political pressure, saying the decision had been based on evidence that the limit of \u00a385,000 covered most APP claims.<\/p>\n

\u201cWe had people wanting a limit of \u00a330,000, we had people wanting no limit.\u00a0We felt it was important to act to set the limit at \u00a385,000 following through on our commitment to the pre-implementation review,\u201d he said, adding that it had been \u201ca finely balanced\u201d decision \u201cdriven by the data\u201d.<\/p>\n

Geale stepped in as interim head of the regulator in June after his predecessor quit amid a row with the previous Conservative government over its attempts to force banks and companies to reimburse fraud victims.<\/p>\n

Critics of the regime say it could pave the way for a spike in complicit fraud, with fraudsters posing as victims or using mules to file fake compensation claims.<\/p>\n

Geale said that payment firms were able to charge an \u201cexcess\u201d of \u00a3100 to customers to deter complicit behaviour. But he expressed little sympathy with concerns that compensation costs could push smaller fintechs out of business.<\/p>\n

\u201cWhat can\u2019t happen is allowing fraud and banking fraudsters as an acceptable cost of business,\u201d he added.<\/p>\n

The PSR has committed to a formal review of the new regime a year after its launch. Geale said it would be judged on whether it has reduced fraud claims and increased the proportion of customers who are compensated without appealing to the Financial Ombudsman Service.<\/p>\n

\u201cI would like to see an increase in controls in particular at fraudsters\u2019 banks and to see fraudsters exiting the market,\u201d he said. \u201cIf we see problems emerging we can act and change things before a year is up.\u201d<\/p>\n

Letter in response to this article:<\/strong><\/p>\n

Tackling fraud must start with the social media platforms<\/em>\u00a0\/\u00a0<\/em>From Silvija Krupena, Director, Financial Intelligence Unit, RedCompass Labs, London, EC2 UK<\/em><\/p>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Unlock the Editor\u2019s Digest for free Social media groups must do more in the \u201cwar of attrition\u201d against financial fraud on their sites, the UK payment regulator has said, adding ministers should consider making platforms liable for compensation to victims. David Geale, interim managing director of the Payment Systems Regulator, told the Financial Times that<\/p>\n","protected":false},"author":2,"featured_media":6611,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[206],"tags":[401,1198,389,575,898,1360],"class_list":{"0":"post-6610","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-financial-crime","8":"tag-fraud","9":"tag-media","10":"tag-payment","11":"tag-regulator","12":"tag-social","13":"tag-tackle"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/6610","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6610"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/6610\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/6611"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6610"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6610"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6610"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}