The UK payments industry has issued an election-day plea for the next government to make tech giants liable for the reimbursement of fraud victims in a bid to alter new rules that would place the burden on the financial sector.
Trade body The Payments Association, which has more than 200 members, said in a letter addressed to the incoming Chancellor that it “strongly urged” a “tech levy” on social media firms, the funds of which could be used to compensate scam victims.
The group argued that this measure, based on the “polluter pays” principle, would make sure Big Tech pays its fair share for the high levels of authorised push payment (APP) fraud that originate online.
The recommendation comes as banks, fintechs and other payment firms brace for new rules from the Payment Systems Regulator (PSR) that will force them to refund victims of APP fraud up to a limit of £415,000 from 7 October.
According to banking trade body UK Finance, Britons lost £460m to APP fraud last year – 76 per cent of which started online.
Dozens of companies are lobbying the PSR to scale back its rules, warning that near-guaranteed reimbursement could encourage more fraud and be unaffordable for smaller firms.
“The PSR’s policy rules as presently constructed will serve to undermine competition, stifle innovation and reduce investment, and it will force smaller players to make a disorderly exit from the UK,” The Payments Association said on Thursday.
“All of this will induce greater levels of debanking, predominately among vulnerable and underbanked consumers.”
Polls widely expect Keir Starmer’s Labour party to emerge as the winner of the general election on Friday.
Draft plans from Labour show it calling the PSR’s rules “unfair and unsustainable” and arguing tech companies should be made liable for APP fraud reimbursement, although this is not an official policy position.
Other measures floated by Labour include giving statutory footing to the 2023 Online Fraud Charter, a voluntary agreement signed by the likes of Facebook, Google and Microsoft to prevent fraud.
The Payments Association called for the incoming Chancellor to ensure the £415,000 cap is lowered to £30,000, arguing this would cover more than 95 per cent of cases. A person familiar with the matter said lowering the threshold is the group’s first priority.
The PSR last month rejected its call to delay the measures by a year and said it would impose the rules as planned, having engaged with the industry for more than two years.
In its new letter, The Payments Association also called for the appointment of a dedicated anti-fraud minister to “coordinate cross-departmental activities to ensure all parties bear some responsibility for the evolving threat of fraud”.
Tony Craddock, director general of The Payments Association, said: “The current landscape is all too easy for fraudsters to navigate, and the PSR’s proposed changes 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 7 October.”
The Conservatives, Labour and trade body TechUK did not respond to requests for comment.