In an unprecedented move that underscores the severity of fraud in the UK, the chief executives of nine leading British banks have urged prime minister Rishi Sunak to ensure technology companies share the financial burden caused by the escalating online fraud crisis. They argue that the digital deception epidemic is damaging international investors’ confidence in the UK economy, making the country a prime target for fraudsters.
A Call to Strengthen the National Fraud Strategy
The bank executives express concerns that the government’s recently announced National Fraud Strategy falls short of tackling the crisis’s enormity, estimating it to cost the nation over £1bn annually. The fraudsters, they point out, stole a daily average of £2,300 per minute from UK consumers in the past year alone.
While they are willing to take further steps to safeguard their customers, including slowing down payments—a move they admit is a harsh measure that might delay legitimate transactions—they insist on more comprehensive government action. The executives maintain that online fraud is not merely a fiscal concern but a strategic threat that shakes the credibility of, and confidence in, the UK’s economy and financial sector as a whole.
Technology Firms and Fraud Prevention
In their letter to Rishi Sunak, the bankers urge tech companies to take on greater responsibility for halting scams at the source and contributing to fraud refunds when fraud originates from their platforms. They also propose a public register to indicate the scale of the tech giant’s failure to prevent fraud.
The plea indicates mounting frustration among banking leaders over major tech companies like Meta Platforms, owner of Facebook, Instagram, and WhatsApp, carrying an insignificant portion of the financial burden caused by fraud. TSB Bank even wrote to the New York-based company this week, calling for stricter policing of its social media operations.
A Collective Commitment for Refunds and Prevention
Banks like Barclays, NatWest, Nationwide, Lloyds Bank Group, HSBC UK, Santander UK, Handelsbanken, and Starling Bank, have been striving to combat fraud, investing over £500m in the last three years to build defences that have thwarted attempts of fraud worth over £2bn annually.
Their strategy focuses on urging Rishi Sunak to make voluntary measures aimed at the tech and telecom sectors mandatory, including measures to educate consumers about the security and data risks of making payments. They believe tech companies should also provide more visible warnings to customers, particularly concerning the growing number of purchase scams on META platforms.
Addressing the “Pandemic” of Online Fraud
While acknowledging the efforts made to tackle the issue, the banking leaders argue that they are hindered by the Financial Ombudsman Service, which, they say, has placed an unreasonable burden on their industry. Their correspondence also reflects their lack of confidence in Whitehall’s plans to curb fraud, based on their recent conversations with government officials.
The banking heads further suggested that data should be routinely published to expose tech companies with high fraud levels originating from their platforms. They also called on the government to target a more ambitious 25% reduction in fraud instead of the proposed 10%.
The bank leaders’ plea emphasises their shared commitment to combat the rising tide of UK fraud, stressing the need for collective responsibility across the tech, telecom, and banking sectors. Their efforts to implement effective fraud prevention measures are a testament to the gravity of this growing crisis, and their insistence on a more aggressive strategy underlines the urgency of the situation.
A Step Too Far?
While it’s important for banks to engage tech giants in combatting the rising fraud epidemic, demanding financial contributions for fraud reimbursements seems an overreach. It’s noteworthy that banks have only recently started to seriously address fraud because it impacts their bottom line—forced, as they are, to offer refunds. In earlier years, securing a refund was virtually impossible. But due to public and parliamentary pressures, this stance has changed.
Instead of offloading blame to tech companies, the onus should be on the banks to introspect, innovate, and bolster their security mechanisms to curb fraud. The primary responsibility of safeguarding their customers falls to the banks, not the tech giants. After all, the mandate of customer protection should inherently reside within the banking sphere as an essential part of their business ethos.
