Pressure to hold Big Tech and Telecos accountable for not doing enough to stop financial crime

In Britain, there is increasing pressure for the Big Tech platforms and telecoms firms to face a new corporate criminal offence for failing to prevent financial fraud.

The research recommends that the proposed criminal offence of "failure to prevent fraud" be applied to internet platforms, along with monetary fines.

The advice is contained in a report released over the weekend (Saturday) by the Fraud Act 2006 and Digital Fraud committee of the House of Lords.

It follows growing concern that the rising expense of living has rendered customers increasingly susceptible to internet scams.

Currently, only lenders and banks are obligated to pay victims of fraud and scams.

The Big Four platforms or GAMA (Google, Amazon, Meta/Facebook, and Apple) have been legally protected against fraud victims for years. However, the sentiment in Britain and the EU is shifting.

“Platform companies and telecom companies have basically skipped off without responsibility for the fact that many of their customers are first encountering fraud over their platforms and devices,” said Baroness Nicky Morgan, the committee’s chair.

“The levels of fraud are undermining people’s confidence in financial institutions and in the companies which they’re dealing with,” she said.

The recommendation says the new law should mirror the UK’s health and safety rules, which can lead to the prosecution or disqualification of company directors. “It’s as much about changing behaviours as it is about allowing the courts and police to prosecute more people,” she said.

During the pandemic, fraud increased by 8% in 2021, according to figures from UK Finance, a trade association for the financial services industry, which branded the crime as a "epidemic."

In the meanwhile, the Pensions Regulator, the Financial Conduct Authority, and the Money and Pensions Service issued a warning on Friday about a heightened risk of pension fraud due to economic instability.

Under the online safety measure presently making its way through the legislature, internet platforms will have a duty of care to safeguard their customers from fraud. However, the bill does not cover telecoms providers or other connected industries.

Lenders have applauded the internet safety bill, arguing that they are the only parties compelled to reimburse users impacted by fraud and scams. However, some have sought for additional revisions.

Sian McIntyre, managing director of Barclays UK, stated, "It’s a very good step but I do think that more needs to be done."

She would also like to see tech companies publish information regarding the nature and frequency of scams on their platforms.

By fLEXI tEAM