Spotlight Europe UK
Cybersecurity Europe Spotlight

Financial Leaders Back Labour Plan to Force Tech Firms to Share APP Fraud Reimbursement Burden

With the next general election imminent in the UK, reports suggest that the Labour Party have drafted plans to force tech firms to reimburse victims of fraud originating on their platforms, in an effort to combat the growing threat of authorised push payment (APP) fraud.

Polls indicating voting intention across the UK continue to suggest opposition party Labour is far out in the lead just one day before voters submit their ballot sheets.

But the general population aside, the Labour Party also appears to have emerged as a popular choice for financial leaders, as Equals Money reveals that 55 per cent of them intend to vote for Labour in the general election, with 56 per cent believing a win for the party will have a positive impact on their business.

It was also the only party where the majority of financial leaders thought that a win for them would have a positive impact on their business (56 per cent) over a negative impact (26 per cent).

New reports of the Labour party exploring the idea of enhancing the burden of responsibility when it comes to APP fraud are also welcome news to much of the financial ecosystem in the UK. Currently, the Payment Systems Regulator (PSR) and Pay.UK require payment service providers (PSPs) to reimburse victims within five working days, with receiving PSPs required to share the cost of the fraud loss with the sending PSP.

But this approach has come under criticism, with many suggesting this setup means tech firms aren’t incentivised to crack down on APP fraud at the source. Should Labour’s plan come into effect, it could have a significant impact on the existing fraud landscape.

Facing APP fraud

APP scams are the most dangerous type of fraud to businesses and consumers alike, according to a new report from The Payments Association. It says APP fraud losses amounted to £459.7million, down five per cent compared to last year – comprised £376.4million of personal losses and £83.3million of business losses.

Riccardo Tordera
Riccardo Tordera, director of policy and government relations for The Payments Association

Riccardo Tordera, director of policy and government relations for The Payments Association, breaks down why it is so difficult to tackle: “The problem [with APP fraud] stems from how many people a fraudster can target with that message: years of data leaks mean that bad actors can get tens of thousands of phone numbers for very little, and if a fraud attempt is only one per cent effective, it could still cost hundreds of people thousands of pounds. In short, it isn’t the sophistication but the scale of APP fraud that is most worrying.”

Despite this, the financial industry continues to grapple with fraudsters and has failed to make any meaningful dent in the losses caused by APP fraud – some suggest part of the reason for this is caused by a lack of responsibility taken by tech firms and social media platforms, something the labour plan looks to change.

Making social media platforms complicit

As long as the onus remains on banks to reimburse victims of fraud, it may be the case that there is not enough pressure on tech firms to do their part in preventing APP fraud on their own platforms in the first place.

Silvija Krupena, director of the financial intelligence unit at RedCompass Labs
Silvija Krupena, director of the financial intelligence unit at RedCompass Labs

Silvija Krupena, director of the financial intelligence unit at financial consulting firm RedCompass Labs, comments: “It’s important that social media platforms don’t get let off the hook when it comes to reimbursing victims of online fraud. Seventy-seven per cent of all APP fraud cases originate online through platforms like Meta, which rake in billions of dollars in profits each year.

“Criminals use social media platforms to source material for AI and then contact potential victims with a simple message on the same platforms to scam people out of thousands of their hard-earned cash. It is vital that these companies not only face financial consequences when user information is compromised but also when they fail to educate their users about the potential dangers of online fraud.

“Ahead of the new rules in October, banks also need to be prepared to take preventative action. They should focus their investment on exploring new technologies such as AI and data-driven, persona-based approaches, which can flag suspicious transactions and stop them before it’s too late. This will potentially save hundreds of millions of pounds from being stolen by fraudsters.”

Ensuring ‘a balance of both customer awareness and responsibility’

The key to combatting APP fraud is collaboration, and this potential Labour plan could be crucial in enhancing this.

Jessica Cath, head of financial crime at Thistle Initiatives, APP fraud Labour
Jessica Cath, head of financial crime at Thistle Initiatives

“If tech firms were liable for reimbursing victims (at least in part) this would encourage collaboration and data sharing across sectors to help bring fraud rates down,” explains Jessica Cath, head of financial crime at Thistle Initiatives, a compliance consultancy for financial services.

“Multi-industry responsibility and collaboration would make APP fraud prevention much more effective – for example, if social media and telecom companies were encouraged to share suspicious behaviour related to a phone number or social media profile, they could be linked to bank accounts. This would make the identification and elimination of fraud networks far easier.

“That said, we must consider the unintended consequences too. Pulling tech firms into reimbursement still focuses on providing a safety net for consumers. It wouldn’t encourage consumers to be more careful; instead, it says, ‘Don’t worry if this turns out to be fraud, you’ll get the money back if so’. To ensure the best fight against fraud, there needs to be a balance of both customer awareness and responsibility, as well as better detection, prevention and reimbursement in certain circumstances.”

‘Let’s stop giving fraudsters a free pass’

Although education remains a hugely important aspect of tackling this, and other, types of fraud, a more active role played by the tech firms could help drastically reduce the losses incurred by victims of scams on their platforms.

Iain Armstrong, Regulatory Affairs Practice Lead for ComplyAdvantage. APP fraud Labour
Iain Armstrong, regulatory affairs practice lead for ComplyAdvantage

Iain Armstrong, regulatory affairs practice lead at ComplyAdvantage, the AI-driven fraud and AML risk detection firm, said: “It’s encouraging to see hints of a firmer approach forthcoming from politicians, as it’s high time telecoms and tech giants were held accountable for their role in enabling authorised push payment (APP) fraud.

“Victims of these scams often find their lives shattered, and investigators privately despair at the impotence of current measures against the platforms that harbour these fraudulent schemes.

“While the financial services industry clearly has a role to play in terms of keeping their control environments up to date with the latest advancements in fraud detection and monitoring capabilities, the real battleground is the channels fraudsters exploit to ensnare unsuspecting victims. It’s not just about updating financial controls; it’s about strengthening the digital infrastructure on which scammers thrive.

“There are a number of measures that could be imposed on tech and telecoms firms that would make a real difference, such as more robust mandatory due diligence for advertisers, clearer fraud reporting channels for social media users, and transparent public disclosures of fraud incidents by tech and telco platforms. These are not just recommendations – they are imperatives. Let’s stop giving fraudsters a free pass and start demanding accountability from the tech and telecom sectors.”


  • Tom joined The Fintech Times in 2022 as part of the operations team; later joining the editorial team as a journalist.

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