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Facebook owner Meta is launching a data-sharing partnership with UK banks to prevent fraud, as the social media platform comes under increasing pressure from lenders and politicians to do more to stop scams.
Meta said Wednesday it has begun widely rolling out its Fraud Intelligence Reciprocal Exchange, a channel for banks to share transaction information with the Silicon Valley company to help it catch scammers.
The move follows a pilot with NatWest and Metro Bank which the technology group says helped close 20,000 accounts after banks shared links to malicious websites where fraudulent transactions were taking place.
The expansion comes as the tech sector comes under increased scrutiny for its role in enabling authorized push payment (APP) fraud, where victims are tricked into sending money from their bank accounts to fraudsters.
Britons lost £460 million to APP fraud last year, according to trade body UK Finance, with 70 percent involving goods ordered online by consumers but not arriving.
According to Lloyds Banking Group and TSB, most purchasing fraud stems from false advertising on social media platforms, including Facebook Marketplace and Instagram.
Nathaniel Gleicher, global head of anti-fraud at Meta, said the company “would like more banks to work with us”, but cautioned that he could not quantify the impact the initiative would have on fraud. “I don’t think any one approach by itself is a silver bullet for reducing fraud,” he said.
Rocio Concha, director of policy and advocacy at consumer group Which?, welcomed the partnership but said it needed “much greater collaboration between key businesses and government”.
“New obligations should be imposed on telecom providers, online advertising providers and domain registrars, similar to those being introduced for banks and online platforms, to ensure that they verify the legitimacy of users,” he said.
Banks and politicians have criticized the technology sector’s efforts to prevent fraud. Labor said in the run-up to the election that technology companies are contributing “very little” to tackling online fraud or compensating victims, according to a party document seen by the Financial Times.
Meta has signed the online fraud charter, a voluntary agreement drawn up last year between technology companies and the government to reduce fraud.
Social media companies are also required to remove fraudulent advertisements under the Online Safety Act, with media regulator Ofcom having the power to impose fines on companies that fail to do so.
Despite the technology sector’s initiatives to combat fraud, cases of APP fraud will increase by 12 percent to around 230,000 by 2023, fueled by a 36 percent increase in purchasing scams, according to UK Finance.
Under the new rules, which come into effect on October 7, banks and payment companies will be liable to reimburse fraud victims for claims worth up to £85,000.
The financial sector argues that if technology companies share some of the costs with the banks, the platforms would have a greater incentive to tackle the problem at its root.
Gleicher said there have been cases where “bad actors are actually abusing these compensation schemes to commit more fraud” and that Meta already had incentives to combat fraud, including avoiding potential fines from Ofcom.
“The first [incentive] is that our users do not like to fall victim to fraud. “If you want to create a community where people participate, you want them to be safe in that community,” he said.
Commenting on Labor’s draft plans to have tech companies contribute to banks’ fraud compensation payouts, Gleicher said: “Our biggest focus is on doing everything we can, voluntarily and through oversight, to counter these scams and stop them in the first place.”
Mark Tierney, CEO of Stop Scams UK, said the cross-sector coalition was “delighted to see some of our member banks joining Meta’s FIRE initiative”, adding that it “could be a game-changer for reporting fraudulent content”.