The Banking and Payments Federation of Ireland (BPFI) has called for social media companies to take responsibility for their role in showing fake advertising and scams to consumers. The BPFI appeared before the Oireachtas finance committee on Wednesday to address the issue of authorised push payments (APP) fraud and other types of fraud in the industry. APP fraud occurs when one person is scammed into sending money to the bank account of a fraudster. In most cases, the customer fully believes they are making a legitimate payment.
Niamh Davenport, head of financial crime at the BPFI, told the committee that instances of APP are being driven by “fraudsters abusing online platforms to scam victims”. This includes investment scams advertised on search engines and social media, romance scams committed via online dating platforms, and purchase scams promoted through auction websites. Davenport added that almost 80% of these types of scams originate through online advertisements in the UK. Focusing on reimbursing the victims will not slow down or reverse the incidents of fraud, Davenport said.
When asked about social media companies advertising potential scams, Ms Davenport said there needs to be some “accountability and responsibility” because at the moment, they are taking down scams after being alerted by the banks or by consumers. Alerting a bank to an instance of fraud as soon as possible will help them claw back as much money as possible but getting the whole amount back is not always feasible. The fraudster will try and move the money out the receiving account as soon as possible to get it out of the reach of the victim’s bank.
“To effectively combat APP fraud, Ireland needs a centrally led, ‘whole of system’ response where social media companies, telecoms, financial services, the State, and An Garda Síochána can collaborate to devise appropriate strategies to better share intelligence, implement protections for consumers and develop barriers to criminals,” Ms Davenport said. She added that the BPFI are not against bringing in these types of protections for customers but the country does need to be careful that “we don’t introduce a culture of fraud and become a destination for fraudsters”.
Banks operating in Britain currently have to reimburse victims of APP on fraudulent payments of more than £100 (€115). The victim’s bank and the fraudster’s bank share the cost of the reimbursement. The BPFI added that there needs to be a national strategy for combating economic crime and that at the moment there is no “shared fraud database scheme” which would allow the sharing of real-time information across financial institutions and law enforcement.
In conclusion, the BPFI has highlighted the need for social media companies to take responsibility for their role in showing fake advertising and scams to consumers. They have called for a centrally led response where different sectors can collaborate to devise appropriate strategies to better share intelligence, implement protections for consumers and develop barriers to criminals. The banking industry also needs to have a national strategy for combating economic crime and a shared fraud database scheme to allow the sharing of real-time information across financial institutions and law enforcement. The BPFI also emphasized the need to be careful in bringing in protections for customers so as not to introduce a culture of fraud and become a destination for fraudsters.