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Labour MP Luke Charters has backed the UK fintech industry’s campaign to bring in shared liability for fraud on social media and telecommunications platforms.
Innovate Finance, a trade association representing payments and banking firms, has set out a strategy to halve fraud by 2028, in which it called on the government to establish a National Anti Fraud Centre for cross-sector data sharing and beef up the Online Safety Act.
As covered by Vixio, backbench Labour MP Charters recently warned that social media companies were in a last chance saloon and had to do more to tackle fraud voluntarily or risk legislation requiring them to do so being imposed.
“To effectively combat fraud at scale, I believe we should establish a national anti-fraud centre,” he said in a media statement alongside the Innovate Finance report. “By uniting insights, intelligence, and expertise from across industries, this centre could serve as a formidable force against fraudsters, enabling real-time threat detection and disruption.”
Innovate Finance said to deliver on the shared liability proposal the government would have to amend the Online Safety Act 2023 to:
- Introduce a reporting framework to ensure reported fraud is handled with impartiality, and enables cross-industry data sharing and analysis.
- Set up a fraud origination redress fund for telecommunications firms and social media platforms to pay into.
- Create a distribution mechanism to issue reimbursements from responsible parties.
- Establish a dispute resolution process to resolve disputes between social media platforms and telecommunications firms.
Janine Hirt, CEO of Innovate Finance, said the UK urgently needs a more collaborative, targeted and effective anti-fraud strategy
“Critically, there is nothing in place with the critical mass or scale required to crush organised fraud,” she said. “There is widespread agreement that establishing a National Anti Fraud Centre would be the appropriate vehicle to deliver this.”
Innovate Finance said that fraud prevention currently focuses on a few large firms, while a new National Anti Fraud Centre can scale-up fraud data sharing initiatives and ensure they can be accessed by firms of all sizes.
It also called for the UK to build an anti-fraud tech industry and said a National Anti Fraud Centre should be funded in a way that does not add pressure to the public purse.
More than three quarters of authorised push payment (APP) fraud originates online, Innovate Finance pointed out.
Recent data from fintech firm Revolut has echoed this, revealing that fraud originating from Meta constitutes 60.5 percent of all reports received. This is despite fraud reimbursement rules in the UK meaning that payment service providers are the only ones liable to reimburse victims.
Innovate Finance’s strategy comes at a time of increasing pressure on social media companies to tackle fraud. David Geale, the head of the Payment Systems Regulator, recently said that social media platforms should play a bigger role in fraud reimbursement during a hearing in parliament.
