Are banks overburdened with duty for cash misplaced to on-line scams?
A head of a digital bank has urged social media companies to share responsibility for losses with consumers who send money to scammers when buying real goods.
Anne Boden, CEO of the Digital Challenger Starling Bank, called for collaboration between different sectors authorized push payment fraud (APP), also known as bank transfer fraud.
APP takes place wWhen a consumer sends money to buy what turns out to be a counterfeit and a criminal actually steals his money. Banks often reimburse customers using the conditional reimbursement model introduced in May 2019. This defines when victims manipulated to make real-time payments to fraudsters should be reimbursed and by whom and banks would normally take responsibility.
In a recent blog post, Boden expressed her hope that other sectors, especially social media platforms, will take some responsibility for such scams.
“Banks are investing billions of pounds in fighting white-collar crime, but we cannot stop them alone,” she wrote.
Boden pointed a finger at social media platforms and telecommunications networks used in various financial crimes. “Very often, [social media] Accounts are used to advertise “money mules” for the purposes of money laundering, the sale of stolen identity and credit card information, phishing, fake investment fraud and impersonation fraud, “she said.
But Boden said banks “appear to have become the underwriters of all kinds of fraud that are not financial fraud at all”.
She added, “If a consumer buys a pair of trainers online from a website that is advertised on a social media platform that is taking their money and running, it is not a financial fraud, it is purchase fraud.”
Boden said there is no impact on the social media platforms the scammers advertise on. “Criminals must not advertise in traditional media with impunity,” she added.
“We fully support the Quota Refund Model code that we signed last year to help customers affected by fraud. But the code was not intended for this type of scam. “
Boden called for a cross-industry approach and better law enforcement to stop the organized gangs behind these scams because “banks can’t do this on their own”.
Gareth Lodge, an analyst at Celent, said that social media “seems to be falling through the cracks of regulation”.
“If you had a contractor who did a bad job, you’d be calling trade standards,” he said. “If you bought something on eBay or Amazon, eBay or Amazon would sort it out and refund you.”
Lodge agreed that there should be a cross-industry approach. “While banks have a role to play, especially in catching suspicious activity, they are not to blame or even directly involved,” he said. “Social media should play a role and there must be a risk to their reputation. However, I think that not just a role but collaboration is key – fighting fraud is everyone’s business. “
Figures from UK Finance show that 57% of fraud cases involve purchase fraud, with 45% of these cases involving amounts below £ 300.
Last year, UK Finance said these crimes were not just a problem for the banking industry. “Government, regulators and other sectors need to step up their roles,” it said. “This includes those organizations that are not directly involved in the payment but may have facilitated the fraud – for example by breaching data or by carrying fake advertisements on their platforms.”