The head of banking industry body UK Finance has called on social media companies to reimburse victims of online fraud, accusing them of “profiting” from scams taking place on their platforms.
Figures from their fraud report show that 78% of authorized automated payment scams, in which the victim is tricked into approving a transaction, started online in the second half of last year, and around three quarters started on social media.
UK Finance Chief Executive David Postings said: “I would like to point out that the banking sector is the only sector reimbursing at the moment, and we believe the burden needs to be shared… I think [tech companies] they should be putting their hands in their pockets, particularly since they profit from it.”
The posts welcomed the measures in the online security bill going through parliament that will require tech and social media platforms to remove fraudulent ads, but said the government had missed an opportunity by not include rules about reimbursement by social media companies in their recently published fraud strategy.
“If we’re going to have a position where people get reimbursed, it seems fair that tech companies are a part of that because ultimately they are currently profiting from the generation of this fraud, and that can’t be right. ,” he said.
Last week, TSB urged social media companies to take “financial responsibility” for scams that occur on their platforms.
Responding to the UK Finance report on Thursday, the bank’s director of fraud prevention, Paul Davis, said: “Action by social media companies and phone companies to reduce fraud is also crucial as these sectors must assume greater responsibility for the safety of their users.
The report also revealed that lost and stolen credit and bank card fraud spiked last year after the contactless spending limit was raised to £100 per transaction and more widespread acceptance of the payment method.
The amount stolen by criminals using lost and stolen cards increased by 30% to £100.2m in 2022 – the first time that losses from this type of fraud have exceeded £100m. There was also an increase in the number of reported incidents, rising 23% to 401,343 cases.
“Increases were expected in 2022 due to increases in contactless limits during the pandemic and also the increased uptake of contactless, which accelerated during the Covid-19 lockdowns,” UK Finance said.
The contactless payment limit more than doubled in October 2021, from £45 to £100. Experts had previously warned that raising the spending limit could leave consumers vulnerable to fraud.
As a fraud prevention measure, cardholders making a contactless transaction are occasionally asked to enter their PIN to prove they are in possession of their card. However, the frequency of this varies between card issuers.
Overall, the total amount lost to all types of fraud fell by 8%, according to the report, but still reached £1.2bn by 2022.
Losses from unauthorized fraud were £726.9m, down less than 1%, and losses from authorized automatic payments were £485.2m, down 17%.
Protections like two-factor authentication for online payments and payee confirmation, where banks match the name of the person the consumer is paying to with the name on the account, are helping to reduce fraud, but UK Finance said “too much money is still being spent.” fall into the hands of criminals.