Thinking about the Big Tech firms, most of them are enabling commerce. Amazon and Apple are building specific structures to make buying and selling easy. But one company is enabling fraud, scams and criminal activities. Meta.
Meta runs Facebook, Instagram and WhatsApp, as well as many other ventures from augmented reality to their X-like idea of Threads.
The thing about those platforms is that they are all allowing connectivity to criminals, and Meta’s doing nothing about it. 2025 is when they will have to wake up and shake up, as regulators are getting more and more concerned about rogue traders. Just look at the new UK law around Authorised Push Payments (APP), which I’ve blogged about a lot lately.
The outcome of all of those discussions is that, from October 7 in the UK, any scam impacting a customer – such as romance fraud – will also be the provider’s problem. Banks and payments companies will need to reimburse any customer affected by such scams within five days up to a limit of £85,000 (the regulator originally made it £415,000), and it can impact both parties: the customer’s account provider and the payee’s account provider.
What was interesting in this regulation is that it is the financial providers who are being punished, rather than the company that allowed such fraud to happen, which is often Meta’s media firms. This is going to change. After all, when one of the world’s largest fintechs, Revolut, says that Meta is in the wrong, something has gotta change*.
In fact, it amused me that, as I wrote this, I had Laura Kuenssberg’s political show playing on the BBC in the background. Laura is the Political Editor of the BBC and runs a regular news show on a Sunday morning. Two of her guests this week were Charlie Nunn, CEO, Lloyds Banking Group, and Brian Cox, the actor known, most recently, for the series Succession (a fantastic show!).
Laura Kuenssberg, Political Editor, the BBC:
Another sort of modern phenomenon that banks have to deal with [is] the huge cost of online fraud and scams. So many of our audience are being hit by all sorts of things. The banks have to pay a lot to compensate people who get caught up in it. But do you think the tech companies are pulling their weight on this front? Do you think they’re doing enough?
Charlie Nunn, CEO, Lloyds Banking Group:
No, we don’t, Laura. So as you say, fraud is 40% of all individual crime in the UK. It’s really harrowing. I listen into calls and hear what people are going through when they experience fraud, and we need to do more to protect customers, not just compensate them. We need to protect them. And 80% of financial fraud in the UK is occurring through the Big Tech companies, almost 70% through one company: Meta.
Facebook, through its Facebook marketplace, the Facebook platform, and the Instagram platform. And they’re the ones that are enabling customers to be contacted by fraudsters and to be able to be messaged so that they’re encouraged to send payments which aren’t safe. So we really are asking for the tech companies specifically to do more to work with us to protect people.
Brian Cox, actor:
There are so many other elements which are really undermining what we do. Particularly the things like TikTok, like Facebook, what have you, and these are very difficult to control. These are almost impossible to control. So ultimately they have an undermining effect and we’ve got to have some way of controlling that, some way of actually shoring up our economy in that way, so that we don’t have these rogue people undermining all the time. And that’s so difficult now because there’s so much going on. It’s not a straight game anymore. It’s quite convoluted and it’s that convolution that is actually undermining at the end of the day.
When these issues are discussed on a political programme, you know that there is a political agenda to change it and, what was interesting for me, is that Meta is the firm always pointed to in this frame. Meta, whose head of Global Affairs is Nick Clegg, former Deputy Prime Minister of the UK, I’m sure is hot on this case. If not, there is a huge trick being missed as I am sure that this is not just a UK phenomenon. The European Commission has already drafted legislation against Meta for its activities, as has the American legislature.
It is obvious it is needed as a recent study from Juniper Research estimates that the money lost to online fraud will rise from $44 billion in 2024 to $107 billion in 2029, an increase of 141%. It does not say that it will all be Meta’s fault, although banks claim that most of it is, and the idea that all responsibility for such frauds should be covered by the banking protection schemes with zero responsibility for Meta is quite ridiculous.
So, I reckon that 2025 will be the year that Meta finds all regulators bringing in rules that will hold them equally liable for social media fraud and that, if a scam hits the banking scheme, then it hits them too.
This will be interesting to watch.
* This may be because Revolut is the most complained about UK firm dealing with payments and scams
Revolut Gets More Complaints About UK Scams Than Rest of UK Banks – Bloomberg
** Nemesis: the inescapable agent of something’s downfall
