It’s time for all sectors to step up and protect their customers from fraud
Rocio Concha, Director of Policy and Advocacy
| Which?
Impersonations of delivery companies. Bogus investment schemes promising life-changing returns. Fictitious items for sale on online marketplaces. Fake WhatsApp messages from ‘children’ in a bid to extract money from unwitting parents. Messages purportedly from the government claiming you are entitled to free money.
I could go on and fill several more paragraphs on the ways that fraudsters are trying to ensnare their victims. I haven’t even mentioned the rapid rise of artificial intelligence which, while bringing benefits to consumers’ lives, will also make telling what’s real and what’s a scam even more tricky than it already is.
Fraud, in general, has become more sophisticated. That is not to say that old-fashioned methods like cold calling or doorstepping don’t still happen, but scammers are increasingly sharpening their tactics online - and all too often exploiting gaps in consumer protections.
Those tactics have become layered. While a scam might start on, say, Instagram via an ad promoting a get-rich-quick scheme supposedly backed by well-known celebrities like Sir Richard Branson to add a layer of authenticity, it will often move to another channel. Victims might be directed to a fraudulent website, told to input their personal information and hand over money to a bank account controlled by the fraudster. In one fell swoop, multiple platforms are implicated in the crime.
This is happening on an industrial scale. Fraud is the most common crime in England and Wales, accounting last year for 37 per cent of all crime, according to the National Crime Agency. The amount of money lost to this crime - to say nothing of the psychological damage inflicted on victims - is eye-watering. Banking body UK Finance estimates that almost £1.2 billion was stolen by criminals through payment fraud in 2023, equivalent to over £2,000 every minute. At a time of sluggish economic growth, that’s money that could be spent with productive businesses, not ending up in the hands of organised criminals, often based abroad.
The best way to tackle fraud is of course to prevent it from happening in the first place. But, as we have seen in recent years, voluntary initiatives have done little to stem the tide. Until last October, most major banks signed up to a voluntary reimbursement scheme, which instructed them to give victims of bank transfer fraud their money back if they weren’t at fault. The reality resembled a reimbursement lottery. Too often, banks dragged their heels, preferring to blame the victim rather than take responsibility for shortcomings in their own processes.
In the tech sector, the government’s Online Tech Charter, a voluntary agreement among the world’s largest tech companies including Google, Meta and Microsoft to reduce scams and fake adverts, has had no meaningful impact on the scale of fraud.
Encouragingly, commitments are beginning to become firmer. A new, mandatory scheme of reimbursement is now in force, covering over 1,500 banks and payment providers, which should be a game changer for victims and put in place real incentives for banks and payment providers to strengthen their protections.
But there remains work to do. The Online Safety Act (OSA), a law campaigned for by Which? and passed in October 2023 to make consumers safer online, will help address the issue of fraud by forcing some platforms to introduce preventative measures to stop their users from encountering fraudulent content in the first place.
Today, Illegal Harms Codes of Practice, legally enforceable duties under the OSA, come into force. These will mean that firms must take swift action to remove user-generated fraud from their sites - and face enforcement action from Ofcom if they don’t.
Yet it is deeply concerning that the regulator has announced a delay in the implementation of Codes of Practice designed to uphold duties related to fraudulent advertising. Under the current timetable, these codes will not be in place until 2027 at the earliest, leaving users exposed to criminal fraud for even longer. For customers to feel safe, these codes need to be sufficiently robust to give tech firms financial skin in the game. They should be introduced much sooner.
In addition to the Online Safety Act, ministers should also accelerate the publication of a Fraud Strategy setting out its plans to close gaps in consumer protections, especially in relation to online advertising outside of the scope of the OSA, and to improve consumer protections from scam calls and texts.
Tackling fraud will not be achieved by one sector alone. Its multidimensional nature requires cross-sector collaboration, from government departments, to law enforcement agencies, to banks, to tech giants and telcos. It is time for all sectors to step up to the plate.
Rocio Concha is Which? Director of Policy and Advocacy and Chief Economist
PoliticsHome Newsletters
Get the inside track on what MPs and Peers are talking about. Sign up to The House's morning email for the latest insight and reaction from Parliamentarians, policy-makers and organisations.
