Tensions rise between banks and tech companies over online fraud liability in the UK
Meta is facing calls from U.K. banks and payment firms like Revolut to financially compensate people who fall for scams on their services.
Jaap Arriens | Nurphoto via Getty Images
Tensions are escalating between banking and payment companies and social media firms in the U.K. over who should be liable for compensating people if they fall victim to fraud schemes online.
Starting from Oct. 7, banks will be required to start compensating victims of so-called authorized push payment (APP) fraud a maximum £85,000 if those individuals affected were tricked or psychologically manipulated into handing over the cash.
APP fraud is a form of a scam where criminals attempt to convince people to send them money by impersonating individuals or businesses selling a service.
The £85,000 reimbursement sum could prove costly for large banks and payment firms. However, it’s actually lower than the mandatory £415,000 reimbursement amount that the U.K.’s Payment Systems Regulator (PSR) had previously proposed.
The PSR backed down from its bid for the lofty maximum compensation payout following industry backlash, with industry group the Payments Association in particular saying it would be far too costly a sum tor the financial services sector to bear.
But now that the mandatory fraud compensation is being rolled out in the U.K., questions are being asked about whether financial firms are facing the brunt of the cost for helping fraud victims.
On Thursday, London-based digital bank Revolut accused Meta of falling “woefully short of what’s required to tackle fraud globally.” The Facebook-owner announced a partnership earlier this week with U.K. lenders NatWest and Metro Bank, to share intelligence on fraud activity that takes place on its platforms.
Woody Malouf, Revolut’s head of financial crime, said that Meta and other social media platforms should help cover the cost of reimbursing victims of fraud and that, by sharing no responsibility in doing so, “they have no incentive to do anything about it.”
Revolut’s call for large tech platforms to financially compensate people who fall for scams on their websites and apps isn’t new.
Proposals to make tech firms liable
Tensions have been running high between banks and tech companies for some time. Online fraud has risen dramatically over the last several years due to an acceleration in the usage of digital platforms to pay others and buy products online.
In June, the Financial Times reported that the Labour Party had drafted proposals to force technology firms to reimburse victims of fraud that originates on their platforms. It is not clear whether the government still plans to require tech firms to pay compensation out to victims of APP fraud.
A government spokesperson was not immediately available for comment when contacted by CNBC.
Matt Akroyd, a commercial litigation lawyer at Stewarts, told CNBC that, after their victory on lowering the maximum reimbursement limit for APP fraud down to £85,000, banks “will receive another boost if their efforts to push the government to place some regulatory liability on tech companies is also successful.”
However, he added: “The question of what regulatory regime could cover those companies who do not play an active role in the PSR’s payment systems, and how, is complicated meaning that this issue is not likely to be resolved any time soon.”
More broadly, banks and regulators have long been pushing social media companies for more collaboration with retail banks in the U.K. to help combat the fast-growing and constantly evolving fraud threat. A key ask has been for the tech firms to share more detailed intelligence on how criminals are abusing their platforms.
At a U.K. finance industry event focusing on economic fraud in March 2023, regulators and law enforcement stressed the need for social media companies to do more.
“We hear anecdotally today from all of the firms that we talk to, that a large proportion of this fraud originates from social media platforms,” Kate Fitzgerald, head of policy at the PSR, told attendees of the event.
She added that “absolute transparency” was needed on where the fraud was occurring so that regulators could know where to focus their efforts in the value chain.
Social media firms not doing enough to combat and remove attempts to defraud internet users was another complaint from regulatory authorities at the event.
“The bit that’s missing is the at-scale social media companies taking down suspect accounts that are involved in fraud,” Rob Jones, director general of the National Economic Crime Centre, a unit of the U.K. National Crime Agency, said at the event.
Jones added that it was tough to “break the inertia” at tech companies to “really get them to get after it.”
Tech firms push ‘cross-industry collaboration’
Meta has pushed back on suggestions that it should be held liable for paying out compensation to victims of APP fraud.
In written evidence to a parliamentary committee last year, the social media giant said that banks in the U.K. are “too focused on their efforts to transfer liability for fraud to other industries,” adding that this “creates a hostile environment which plays into the hands of fraudsters.”
The company said that it can use live intelligence from big banks through its Fraud Intelligence Reciprocal Exchange (FIRE) initiative to help stop fraud and evolve and improve its machine learning and AI detection systems. Meta called on the government to “encourage more cross-industry collaboration like this.”
In a statement to CNBC Thursday, the tech giant stressed that banks, including Revolut, should look to join forces with Meta on its FIRE framework to facilitate data exchanges between the firm and large lenders.
FIRE “is designed to enable banks to share information so we can work together to protect people using our respective services,” a spokesperson for Meta said last week. “Fraud is a multi-sector spanning issue that can only be addressed by working collaboratively.”
Representations of cryptocurrency Bitcoin are seen in this illustration taken November 25, 2024.
Dado Ruvic | Reuters
Cryptocurrencies rose to start the year, rebounding from recent losses as investor optimism returned to the market.
The price of bitcoin rose 2% to $96,711.71 Thursday, bringing its new year gain to about 3% when counting trading from the Jan. 1 session.
The CoinDesk 20 index, a measure of the broader cryptocurrency market, advanced 4%. The token tied to Solana, the popular Ethereum competitor, led the gains with a 7% increase. Crypto stocks Coinbase and MicroStrategy each climbed 4% as well.
Bitcoin rebounds to start the year
This year is expected to be a banner year for the crypto industry thanks to a more favorable regulatory environment promised by President-elect Donald Trump. Investors are hoping Congress will pass its first ever crypto focused legislation – which could be centered around stablecoins or market structure.
Traders are also keen to see the crypto public equity markets open up with more initial public offerings and progress on a potential national strategic bitcoin reserve.
Crypto assets slid into the end of 2024. Although the post-election rally that sent bitcoin to new records above $100,000 had fizzled, the flagship cryptocurrency still ended the year up more than 120%. Long-term holders took some profits while others sold amid renewed uncertainty about the direction of Federal Reserve interest rate cuts in 2025.
Tesla CEO and X owner Elon Musk speaks during an unveiling event for Tesla products in Los Angeles on Oct. 10, 2024.
Tesla | Via Reuters
Tesla posted its fourth-quarter vehicle production and deliveries report on Thursday. Here are the key numbers:
Total deliveries Q4 2024: 495,570
Total production Q4 2024: 459,445
Total annual deliveries 2024: 1,789,226
Total annual production 2024: 1,773,443
Results for the quarter represented the first annual drop in delivery numbers for Tesla, which reported 1.81 million deliveries in 2023. It reported 484,507 deliveries in the fourth quarter of 2023.
Tesla shares fell by as much as 7% in trading on Thursday.
Analysts had expected Tesla to report deliveries in the quarter of 504,770, including 474,000 Model 3 and Model Y EVs, according to a consensus of estimates compiled by StreetAccount. Tesla sent some investors a company-compiled delivery consensus of 506,763 vehicles, based on a survey of 26 analysts. A widely followed independent Tesla researcher, who publishes as Troy Teslike, predicted deliveries of 501,000.
Deliveries are the closest approximation of sales reported by Tesla but are not precisely defined in the company’s shareholder communications.
The fourth-quarter report comes after a huge late-year rally in Tesla’s stock, which finished 2024 up 63%. In mid-December, the shares reached a record, eclipsing their prior all-time high from 2021.
It was a big turnaround from the first quarter, when the stock plummeted 29%, its worst period since 2022, as the company contended with declining sales despite price cuts and incentives for buyers. On the company’s first-quarter earnings call in April, CEO Elon Musk told investors that while he expected “higher sales this year than last year,” the growth rate would slow from 38% in 2023.
The biggest story at Tesla in the back half of the year was Musk’s role in President-elect Donald Trump’s election campaign. Musk, the world’s richest person, poured in around $277 million to promote Trump and other Republican candidates, and spent weeks on the road campaigning in swing states.
Elon Musk speaks with U.S. President-elect Donald Trump at a viewing of the launch of the sixth test flight of the SpaceX Starship rocket, in Brownsville, Texas, U.S., November 19, 2024.
Brandon Bell | Via Reuters
Musk, who also runs SpaceX and xAI and owns social network X, has been tapped to co-lead an advisory group to the Trump administration that will aim to slash federal spending, personnel and regulations.
Sam Fiorani, a vice president at industry research group Auto Forecast Solutions, told CNBC in an email that Musk’s foray into politics may have “pulled his focus away from his core businesses.” However, the degree to which investors or EV buyers care won’t be reflected in Tesla’s numbers until the first quarter, he said.
Until recently, Tesla had been one of the only automakers mass producing battery-electric vehicles. The company now faces an onslaught of competition from domestic automakers, including General Motors, Ford and Rivian as well as BYD in China, Hyundai in Korea, and European auto giants BMW and Volkswagen.
Patrick George, editor in chief of InsideEVs, told CNBC that he thinks Tesla still does many things better than any other EV maker, especially when it comes to its charging network. But Tesla’s biggest operational challenge in the latest quarter was “the nuts-and-bolts job of being a car company.”
‘Piling up on used car lots’
Tesla has invested in a humanoid robotics initiative and chip development, and plans to produce a dedicated robotaxi and start a driverless ride-hailing service before 2027. While Musk and shareholders may not want to view Tesla as just a car company, most of the profits are still derived from vehicle sales.
George said that Tesla made a mistake not bringing “more affordable EVs in 2024,” and added that Cybertrucks — the company’s newest vehicle — are “piling up on used car lots.” The angular steel Cybertruck starts at around $80,000.
With competitors picking up market share in Europe, Tesla experienced a steep drop in sales in the region during the fourth quarter.
From January through the end of November, Tesla sold 283,000 vehicles in Europe, an approximately 14% decline from the same period a year earlier, according to registration data from the European Automobile Manufacturers’ Association, or ACEA. Registrations in Europe slid to 18,786 in November from around 31,810 a year earlier.
The company’s business in China was also pressured in the fourth quarter.
Fiorani said that while the Model Y is the second bestselling model in China, “its growth is failing to keep up with growth of the market.” Through November, sales of the Model Y were up more than 5% but overall EV sales in the country rose 8%, he said.
Meanwhile, BYD and other brands in China, including Chery, Li Auto, Jetour, LeapMotor and Aito, grew substantially faster than Tesla. BYD is also setting up plants outside of China and exporting prodigiously.
In North America, Tesla has remained dominant. The company offered a range of incentives and price cuts, even on its most popular Model Y SUV, during the fourth quarter to drive sales. Still, Tesla experienced a buildup of inventory.
During the fourth quarter, the company sent Cybertruck assembly line workers home for a few days, indicating that it may be looking to avoid flooding the market with too many of the vehicles.
Looking ahead to 2025, Musk said on an earnings call in October that Tesla expects to be offering lower-cost and autonomous vehicles in 2025, which should lead to “20% to 30% growth” over 2024.
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