- Urgent Action Needed: Tech Companies Must Shoulder Financial Burden
- Demands for Accountability and Prevention Measures
- Impact on UK Economy and Financial Sector
The largest British institutions have informed the prime minister that the government must require companies like Meta Platforms, the owner of WhatsApp, to shoulder a portion of the financial burden caused by scams.
Rishi Sunak was informed by the heads of Britain’s largest banks that technology companies must contribute to the cost of a “pandemic” of online deception that undermines international investor confidence in the UK economy.
They stated that the government’s National Fraud Strategy, introduced last month, was insufficient to address the magnitude of the crisis, which they estimate costs more than £1 billion annually to combat.
The bank executives informed the prime minister that fraudsters stole £2,300 per day from British consumers last year.
And they said they would consider taking additional measures “to protect our customers” without broader government intervention. Such as slowing down payments, which they described as “a useful but blunt instrument that will result in legitimate transactions being halted for some customers and businesses.”
In a letter dated June 6, they stated, “Online fraud poses a strategic threat to the prosperity of the United Kingdom and impacts the credibility and confidence in the economy and financial sector.”
They want tech companies to be responsible for preventing scams at their source, to contribute to restitution for victims of fraud perpetrated on their platforms, and to maintain a public database detailing the extent of their failure to prevent scams.
The collective intervention of the banks illustrates the growing discontent with the fact that large technology companies, such as Meta Platforms, the owner of Facebook, Instagram, and WhatsApp, bear so little of the financial burden caused by fraud.
This week, TSB demanded in a letter to the New York-listed company that it rigorously monitors its social media operations.
Robin Bulloch, the CEO of TSB, was one of the signatories of the joint letter to the PM.
Dame Alison Rose, the CEO of NatWest, Debbie Crosbie, the CEO of Nationwide, Lloyds Bank Group’s Charlie Nunn, Ian Stuart, the head of HSBC UK, Matt Hammerstein of Barclays UK, Mike Regnier, the CEO of Santander UK, Mikael Sorensen of Handelsbanken, and Anne Boden, the outgoing CEO of Starling Bank, were the others.
UK Finance chairman Bob Wigley and chief executive David Postings also supported the document.
In the letter, they urged Mr. Sunak to take additional measures to combat “the devastating impact fraud has on individuals, businesses, and the UK economy.”
They stated, “Online fraud poses a strategic threat to the prosperity of the United Kingdom and undermines the credibility and confidence in the economy and financial sector.”
This is not just a problem for the British finance industry.
It is having a significant impact on the attractiveness of the wider UK financial sector in the eyes of foreign investors, which, as we all know, is vital to the health of the City of London and the wider UK economy.
Billions lost to fraud
Last year, £1.2 billion was lost to fraud of all types, according to a UK Finance report, and the executives applauded the appointment of Anthony Browne, a Conservative MP and former head of the British Bankers’ Association.
They told Mr. Sunak that the vast majority of scams targeting British consumers “originate with a small number of tech companies, social media companies, and telecommunications companies.”
“A fraud strategy that does not require action from all actors involved in the fraud journey and collective culpability for the harm caused to consumers will never be effective.
“We are not confident that voluntary measures to be imposed on the technology and telecommunications sectors will bring about the necessary change to reduce the United Kingdom’s attractiveness to fraudsters and protect customers from harm.”
They complained that the Financial Ombudsman Service, which they claimed had placed a disproportionate burden on their industry, was impeding banks’ efforts to address the issue.
Recent conversations with government officials, according to the executives, have not inspired confidence in Whitehall’s plans to combat fraud.
They demanded that Mr. Sunak make voluntary measures aimed at the telecommunications and technology industries mandatory and that they be required to educate consumers on the security and data risks associated with making payments.
The bank executives argued that tech companies should be required to provide more visible warnings to customers.
“One area that we believe requires immediate attention is the disproportionately high prevalence of purchase scams on META platforms,” they explained.
“Tech companies, telecommunications companies, and social media platforms should be held accountable for preventing fraud at its source and contributing to refunds when their platforms are used to defraud innocent victims.”
The bank executives claimed to have spent over £500 million over the past three years “building defenses that help us prevent more than £2 billion in attempted fraud every year.
They also asked Mr. Sunak to publish regular data naming and shaming IT businesses based on platform fraud.
“We can all see how these companies harvest user data to generate advertising revenue; consequently. There must be ways to protect users from unscrupulous actors,” they said.
The bank executives also urged the government to be “more ambitious than the 10 percent reduction [in online fraud] it is aiming for, which would still leave over two million consumers harmed each year.
“With collective commitment across the pillars, the Strategy could be even more ambitious and aim for a more credible 25pc reduction in fraud.”
