/financial crime

News and resources on financial crime, including fraud, scams, Anti Money Laundering and Know Your Customer.
Lloyds, Santander, Barclays, TSB demand Google, Facebook reimburse online fraud victims

Lloyds, Santander, Barclays, TSB demand Google, Facebook reimburse online fraud victims

As reported in The Telegraph, UK banks have urged Big Tech and telecommunications firms to take responsibility for their contribution to the rise of online fraud and voluntarily reimburse victims.

Citing the ‘polluter pays’ principle, a widely recognised concept where those that generate pollution should cover the cost of controlling the risk and the human impact, TSB, Barclays, Santander, and Lloyds have called out Facebook, Instagram, Google, and telecom organisations for not paying anything towards losses.

With £462 million being returned in 2020 and 2021 to financial crime victims when the funds cannot be recovered, The Telegraph references Barclays data that points out that over 75% of scams take place on social media, auction sites or dating apps, reiterating that it is not only banks that must be held accountable.

Barclays’ head of economic crime Sian McIntyre wrote for The Telegraph, stating: “We would like to see a cross-sector pot funded by a polluter pays principle. Those companies that enable scams on their platforms or services should be putting money into that pot.”

Paul Davis, director of fraud at TSB, also mentioned that “partial or total” compensation from technology firms was “long overdue.” “Authorised fraud doesn’t start and end with banks, other sectors play a role in facilitating it. The steps some tech giants have taken to help prevent scams are welcome, but they also need to help with the cost.”

Liz Ziegler, financial crime director at Lloyds, added that big tech companies should evaluate with the wider “industry and government whether they have a role to play in reimbursement.”

Further, Chris Ainsley, head of fraud risk management at Santander believes that it will not be “straightforward to get all stakeholders to share their scams data and work out a reimbursement model, but the fight against fraud won’t be able to move forward without it.”

Comments: (2)

Jeremy Light
Jeremy Light - Fourdotzero - London 25 July, 2022, 22:591 like 1 like

The principle of "polluter pays" should apply also to the banks who allow fraudsters to operate fraudulent bank accounts to collect the funds they scam.

I keep on repeating this and I am amazed at how little visible action is taken by the banks and the regulator to address this issue head on.

When fraud using bank transfers is committed the account the stolen funds are sent to is always known as are any accounts the funds are then forwarded to.

It is equivalent to always knowing the registration details of the getaway car in a robbery and all subsequent getaway cars the criminals use - but doing little with the information.

Innocent victims need to be reimbursed and the platforms that facilitate the scams have a duty to prevent them - but banks need to do more to prevent fraudulent account openings and account takeovers and do more to recognise and trace fraudulent payments flows into and out of their accounts.

It is also bizarre that confirmation-of-payee is used by (some) banks to alert payers if the beneficiary name they think they are paying is different to the account name, a red flag for potential APP fraud, but the receiving bank is under no obligation to do the same, very simple check for incoming payments, again a red flag that the account may be fraudulent if the names are different.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 26 July, 2022, 16:11Be the first to give this comment the thumbs up 0 likes

I'd once raised the question of liability of TELCO, Power Utility, et al in APP Scams. Not sure whether banks were inspired by my thoughts or whatever but I totally endorse their going after other parties that are equaly involved in APP Scam.

Automobile company can't be held liable for selling the robbery getaway car. Payee bank can't be held liable for opening the alleged scammer's account.

KYC is not Character Certificate. Banks can't deny accounts even to convicted scammers. How can they be expected to deny account to alleged scammer?

Payor is totally responsible for APP Scam, particularly if s/he ignored a Confirmation of Payee red flag while initiating the payment. Of course, depending on their jurisdiction, they might be eligible to seek redress from law enforcement.