Meta expands knowledge accord with UK banks in push to chop on-line fraud | USAEMALL.com

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Facebook owner Meta is launching a data-sharing partnership with UK banks in a push to prevent fraud as the social media platform comes under growing pressure from lenders and politicians to do more to stop scams.

Meta said on Wednesday that it had begun widely rolling out its Fraud Intelligence Reciprocal Exchange, a channel for banks to share transaction intelligence with the Silicon Valley company to help it catch scammers.

The move follows a pilot with NatWest and Metro Bank that the tech group said had helped it close 20,000 accounts after banks shared links of malicious websites where fraudulent transactions took place.

The expansion comes as the tech sector falls under greater scrutiny for its role in enabling authorised push payment (APP) fraud, in which victims are tricked into sending money to fraudsters from their bank accounts.

Britons lost £460mn to APP fraud last year, according to trade body UK Finance, 70 per cent of which involved goods that were ordered online by consumers but did not arrive.

Most purchase fraud comes from false adverts on social media platforms including Facebook Marketplace and Instagram, according to Lloyds Banking Group and TSB.

Nathaniel Gleicher, global head of counter-fraud at Meta, said the company “would love more banks to partner with us” but cautioned that he could not quantify the impact the initiative would have on fraud. “I don’t think any one approach is a silver bullet to drive down fraud by itself,” he said.

Rocio Concha, director of policy and advocacy at consumer group Which?, welcomed the partnership but said “much greater collaboration between key businesses and government” was needed.

“New duties, equivalent to the obligations being introduced for banks and online platforms, should be placed on telecom providers, online advertising providers and domain registrars to ensure they verify the legitimacy of users,” he said.

Banks and politicians have criticised the tech sector’s efforts to prevent fraud. Labour said in the run-up to the election that tech companies “contribute very little” to tackling online fraud or compensating victims, according to a party document seen by the Financial Times.

Meta is a signatory to the online fraud charter, a voluntary agreement drawn up last year between tech companies and the government to reduce fraud.

Social media companies are also obliged to take down fraudulent ads under the Online Safety Act, with media regulator Ofcom empowered to issue fines against companies that fail to do so.

Despite the tech sector’s initiatives to combat fraud, cases of APP fraud rose 12 per cent in 2023 to about 230,000, fuelled by a 36 per cent increase in purchase scams, according to UK Finance.

Under new rules set to take effect on October 7, banks and payment companies will be liable to reimburse victims of fraud for claims worth up to £85,000.

The financial sector argues that making tech companies share some of the cost with banks would give the platforms a bigger incentive to tackle the problem at its roots.

Gleicher said there had been cases where “bad actors actually abuse those recompense schemes to commit more frauds” and that Meta already had incentives to fight fraud, including avoiding potential fines from Ofcom.

“The first [incentive] is that our users don’t like getting targeted by fraud. If you want to create a community that people participate in, you want them to be safe in that community,” he said.

In response to Labour’s draft plans to make tech companies contribute to fraud compensation payouts made by banks, Gleicher said: “Our biggest focus is doing everything that we can voluntarily and through regulatory engagement to counter these scams to stop them in the first place.”

Mark Tierney, chief executive of Stop Scams UK, said the cross-industry coalition was “delighted to see some of our member banks join Meta’s FIRE initiative”, adding that it “could become a game-changer for reporting fraudulent content”.