Escalating Tensions Between Banks and Tech Companies Over Online Fraud Liability in the UK

Tensions are mounting between banks, payment firms, and social media platforms in the U.K. over the responsibility for compensating victims of online fraud. Starting from October 7, banks will be required to compensate individuals up to £85,000 if they fall victim to authorized push payment (APP) fraud—a type of scam where criminals manipulate people into transferring money to them.

Although the £85,000 limit is lower than the £415,000 initially proposed by the U.K.’s Payment Systems Regulator (PSR), it still represents a significant burden for banks and payment companies. Industry groups, such as the Payments Association, argued that the higher compensation figure would have been too costly for financial institutions to bear.

As mandatory fraud compensation takes effect, concerns are growing within the banking sector about whether they are being unfairly saddled with the financial cost of protecting consumers from fraud. The issue has sparked criticism from financial institutions like digital bank Revolut, which recently accused Meta, the parent company of Facebook, of not doing enough to combat fraud on its platforms.

Revolut’s head of financial crime, Woody Malouf, argued that social media companies should share the financial burden of reimbursing fraud victims. Malouf said that by avoiding financial responsibility, platforms like Meta lack the incentive to implement stronger anti-fraud measures.

This conflict over fraud liability highlights the growing pressure on both financial institutions and tech companies to find solutions to the rising tide of online scams, as consumers continue to fall victim to fraud through digital channels.