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UK payments group urges incoming Government to make Big Tech refund fraud victims

On the day that the United Kingdom heads to the polls to vote in the General Election, The Payments Association has issued a plea to the incoming Chancellor to impose a 'Tech Levy' on social media giants to pay for the impact of payments fraud originating from their platforms.

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UK payments group urges incoming Government to make Big Tech refund fraud victims

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

The Association says Big tech companies should be forced to pay compensation to victims of fraud on the basis of the ‘polluter pays’ principle.

The lobby group has also been increasingly vocal on the reimbursement rules set to be introduced by the Payment Systems Regulator which have set a maximum mandatory refund by banks for APP fraud victims to £415,000. The Payments Association is instead calling for the threshold to be substantiallyy watered down to a £30,000 maximum.

The Association has also called for the appointment of a dedicated Anti-Fraud minister who would coordinate cross-departmental activities to ensure all parties bear some responsibility for the evolving threat of fraud.

The Labour Party is currently on course for a landslide victory in today's polls. Draft plans from the left-leaning party have indicated that it believes the PSR's rules to be “unfair and unsustainable” and that tech companies should shoulder the burden of compensating fraud victims.

In its letter to the incoming Chancellor, the Payments Association has also called for the the publication of an ambitious, whole-ecosystem National Payments Vision and Strategy, the delivery of the next phase of open banking and open finance, and the adoption of legislative measures towards the creation of a proper digital asset ecosystem that embraces web3, DeFi and smart contract standards.

Tony Craddock, director general of The Payments Association, says: "A clear vision and strategy from the new Government will generate significant investment and promote the UK’s position as the global payments leader solidified and see sustained growth in every UK region.

“We especially hope the Chancellor sees the benefits of lowering the threshold for mandatory reimbursement of an APP fraud claim and potentially introduce a dedicated Anti-Fraud Minster. The current landscape is all too easy for fraudsters to navigate and the PSR’s proposed changes to will only serve to exacerbate the situation. Swift action as proposed in our letter is necessary to mitigate the potential threats once the changes are introduced on October 7th.”

UK Finance has also weighed in with its own financial service manifesto outlining key priorities the next government should focus on. The manifesto echoes the demands of the Payments Association and also calls for legislation to ensure information held on Companies House can be properly verified and relied upon and for the issuance of a digital gilt backed by HM Treasury to encourage the development of securities tokenisation, among other demands.

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Comments: (3)

Ketharaman Swaminathan

Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

I predicted that the draconian APP Scam Compensation rule holding banks unilaterally liable was a populist measure in an election year and would go away after the elections. It happened even before that, thanks to change of PSR Chief, which was an unexpected windfall for banks.  

I also pointed out in my blog post blog post Fraud v Scam: Who Is Liable For Cybercrime that APP involves a number of parties like BigTech, Telco, Utility, etc. and advocated that banks should move to hold those parties responsible for compensation. Nice to see that happening now. 

Anthony Walton

Anthony Walton CEO at Iliad Solutions

I think "friendly" fraud is a big unaddressed problem here.  Whereby two people collude , money is sent, the sended complains and gets "automatically" compensated and the two parties split the money.  The bar for what a genuine fraud is will be incredibly high.

Ketharaman Swaminathan

Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

As I pointed out in Why Don’t UPI / Zelle Provide Fraud Protection?, credit card had tons of friendly fraud, merchants complained, A2A RTP was introduced as a more merchant-friendly alternative method of payment. It's funny how people forget that and don't realize that, if A2A RTP provided the same level of fraud protection / potential for abuse as credit card, it will become as merchant-unfriendly as credit card as suffer from lack of merchant adoption.

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