UK Payment Regulator's APP Fraud Investigation: Can Social Media Giants Be Held Accountable?

The Payment System Regulator’s fraud origins investigation confirmed what we all knew, but what will actually be done? 

If you live in the UK, you will no doubt have stumbled upon a horror story about fraud. Maybe you decided to get concert tickets from a slightly suspect Facebook account, or perhaps you have a friend or relative who has been scammed over a second hand piece of furniture. Fraud has also played a role in storylines on the soaps recently as part of the BBC's scams awareness campaign. Eastenders Jean Slater was persuaded to transfer her pension into a high return investment after participating in a free pension review, while in the Archers, residents turned up at a character's home saying they had paid £360 to spend four nights there due to a fake listing.

The Role of Social Media in the UK's Growing APP Fraud Epidemic

Even I, dear reader, someone who has been reading and writing about authorised push payment (APP) fraud, have been one of those who has been defrauded. Albeit, it was £20 but parting ways with it before being ghosted by the seller, was a kick in the teeth. It showed me just how brutal and how easy it is to fall victim to this crime. And one of the reasons so many in the UK fall for this crime? Social media.

What was once a way of keeping up with people you met on holidays and seeing wedding pictures has become a hunting ground for fraudsters, something which many market players in the banking and payments industry have been warning for sometime. To their credit, tech platforms like Meta have become more alert to the issue recently. For example, the company launched the Fraud Intelligence Reciprocal Exchange (FIRE) in the UK to combat scams. This threat intelligence sharing programme allows banks to share intelligence with the company directly, and a successful pilot has seen it being expanded to more retail banks.

What the PSR’s APP Fraud Report Means for Regulation and Accountability

Payment service providers (PSPs) have long argued that fraudsters are exploiting major platforms to deceive consumers, and a new report from the UK’s Payment Systems Regulator (PSR) suggests that it agrees with this analysis. The report, published in December 2024, uncovered patterns in how scammers operate across various platforms and scam types, such as romance, purchase and investment scams. The PSR’s report, based on data from 14 major UK banking groups, reveals that more than half of scams in 2023 originated on Meta platforms (Facebook, Instagram, WhatsApp), accounting for 54% of incidents and £62m in losses. Facebook alone was linked to 44% of purchase scams, with losses of £19.5m. Telecom and email-based fraud also caused significant harm. Fraudulent calls and texts contributed to £107.2m in losses (31.5% of the total), while email scams, though less frequent, resulted in £35m in losses.

The £341m lost to scams in 2023 undermines consumer trust in financial institutions and digital platforms, threatening the stability of the UK payments ecosystem. Public confidence in social media companies has fallen four times more than in traditional banks, highlighting systemic vulnerabilities and raising questions about regulatory oversight and accountability. In her 2024 Mansion House speech, Chancellor Rachel Reeves called on social media and telecom firms to combat fraud more effectively. Alongside Home Secretary Yvette Cooper and Technology Secretary Peter Kyle, she urged these industries to accelerate efforts and provide updates by March 2025.

The PSR report underscores a critical issue: platforms like Meta are central to initiating fraudulent activity, leaving payment service providers (PSPs) financially exposed under new fraud reimbursement rules. Politicians, including the Home Affairs Select Committee, have suggested measures such as a fraud levy on these firms. While the PSR lacks direct oversight of digital platforms, it urges tech, telecom, and social media companies to collaborate with payment firms to close vulnerabilities exploited by fraudsters. Without legislative action to hold these firms accountable, the growing scale of fraud poses long-term risks to economic stability and consumer confidence.

Could this be the start of change? 

The PSR's report on fraud could have significant implications for the regulation of PSPs and major tech platforms in the UK. It is not hard to imagine mandatory data-sharing agreements and cross-sector initiatives aimed at identifying and mitigating fraud risks, especially as lawmakers in the UK have already called for initiatives such as the Online Fraud Charter, published in November 2023, to be strengthened. The new reimbursement rules for PSPs introduced meanwhile in October 2024 have established a high standard for consumer protection. Yet, if these sorts of findings continue to surface, regulators may expect platforms to contribute to reimbursement schemes or fund fraud prevention measures. 

PSPs, in particular, already face increased compliance burdens, including stricter monitoring of transactions and enhanced reporting requirements. Government departments such as the Treasury may decide that platforms frequently implicated in scams, such as Meta, should be subject to stricter regulations on identity verification and advertising practices, and in the EU, the European Parliament is actively advocating for broader liability for social media firms under the Payment Services Regulation. 

Although this has faced resistance, particularly from some within the European Commission, it raises an important question: will the UK government and regulators follow suit? With research like this coming out of the PSR, the UK may well consider introducing new legislation to enforce platform accountability, mandate industry collaboration and enhance fraud reporting transparency across sectors. Yet, how can we forget, this is coming at a time where the UK and EU alike are preparing for a second Trump presidency, where big tech companies appear to have the ear of the incoming President. 

Could the UK government and EU find themselves facing diplomatic fall-outs over tighter oversight of platforms like Facebook? Trump and those in his future administration, like Elon Musk, have already made it clear that they are unperturbed by the idea of fall-outs with European allies like the UK and Denmark, and the thought of foreign governments being able to force their biggest success stories like Meta may push things. 

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