The head of UK Finance, the banking industry body, has called on social media companies to compensate victims of online fraud, accusing them of “profiting” from scams occurring on their platforms.
Figures from the fraud report show that 78% of authorized instant payment scams, where a victim is tricked into agreeing to a transaction, started online in the second half of last year, with about three-quarters of those starting on social media.
UK Finance chief executive David Postings said: “I would point out that the banking sector is the only sector footing at the moment, and we think the burden has to be spread… I think (technology companies) should put their hands in their pockets, Especially when they take advantage of it.”
The publication welcomed measures in the Online Safety Bill passing through Parliament that would require tech and social media platforms to remove scam ads, but said the government had missed an opportunity by not including payment rules by social media companies in its recently published fraud strategy. .
“If we have a position where people are compensated, it seems only fair that tech companies should be a part of that because, at the end of the day, they’re currently benefiting from generating this fraud, and that just can’t be right,” he said.
Last week, the TSB urged social media companies to take “financial responsibility” for scams that occur on their platforms.
Responding to the UK Finance report, the bank’s director of fraud prevention, Paul Davies, said: “Action from social media and telephone companies to reduce fraud is also critical – these sectors must take more responsibility for the safety of their users.”
The report also revealed that lost and stolen bank and credit card fraud rose last year following an increase in the contactless spending limit to £100 per transaction and widespread acceptance of the payment method.
The amount stolen by criminals using lost and stolen cards jumped 30% to £100.2m in 2022 – the first time losses from this type of fraud have exceeded £100m. There was also a rise in the number of reported incidents, increasing by 23% to 401,343 cases.
UK Finance said: “Risees were to be expected in 2022 due to increases in contactless limits during the pandemic and also increased acceptance of contactless devices, which has accelerated during Covid-19 lockdowns.”
The contactless payment limit more than doubled in October 2021, going from £45 to £100. Experts have previously warned that increasing the spending limit could leave consumers vulnerable to fraud.
As a fraud prevention measure, cardholders who make a contactless transaction are sometimes asked to enter their PIN to prove they have possession of their card. However, the frequency of this varies among card issuers.
Overall, the total amount lost to all types of fraud decreased by 8%, the report found, but would still amount to £1.2 billion in 2022.
Unauthorized fraud losses were £726.9m, down less than 1%, and paid payment losses were £485.2m, a drop of 17%.
Protections such as two-factor authentication for online payments and payee confirmation – where banks match the name of the person the consumer is paying with the person on the account – help reduce fraud, but UK Finance said “there’s still a lot of money falling into the hands of criminals”.