U.K. Parliament Introduces New Online Safety Bill to Curb Push Payment Fraud
The UK Parliament introduces a new Online Safety Bill, to mitigate push payment fraud and increases the responsibilities of social media platforms to monitor suspicious activities.
The key concept of this bill is to impose a new online duty of care on digital platforms requiring the removal of illicit content and for the “high-risk, high-reach” services, also material that is legal but harmful. However, a few days before legislating the bill, on March 8, the government also added a new provision that mandates digital businesses to take steps to prevent unlawful advertisements from appearing on their platforms.
Particularly the new duty included in the bill majorly focused on the bogus paid advertisements, whether they are being governed by an advertising agency or by the platform itself. However, such ads include unauthorized financial promotions, criminals impersonating legit companies and ads for shell businesses. However, the pressure will be increased on the platforms, will require to integrate systems and processes to reduce the hosting, publication of bogus advertising on their platforms and remove them as soon as possible.
Additionally, the businesses subject to this bill may be held accountable if they fail to stay put with the obligations and implement the required mechanisms to remove the fraudulent advertisements in a timely manner. The UK Telecom regulator (OFCOM) will be developing a code of practice with specific measures for the social platforms’ compliance regarding fraudulent advertising duties. This new initiative will help to curb the number of bogus advertisements and online scams, but it would not change the existing responsibility that Payment Service Providers (PSPs) still have to reduce the risk of authorized push payment fraud.
Thus, all the financial firms and banks have a responsibility of exercising reasonable care with their customers to avoid APP fraud. The duties include verifying the source and location of the transactions, the amount and the beneficiary owners. However, there are no legal obligations for PSPs, banks and banks to repay victims if they have practised reasonable care, partially, if they have Anti-Money Laundering (AML) and Know Your Customer (KYC) solutions haven’t determined any unusual activities.
In January 2022, the regulators also proposed a few measures to combat payment fraud. Under the proposal, the banks are required to publish the information on their performance in relation to the scams, reimbursements levels for victims, and the account details that are being used to send or receive bogus transactions.