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.”
Eric Yuan, founder and CEO of Zoom Video Communications, speaks at Concordia Annual Summit in New York on Sept. 25, 2024.
Leigh Vogel | Concordia Summit | Getty Images
Zoom shares were down 4% in extended trading on Monday after the video calling software maker announced strong fiscal third-quarter results and gave quarterly guidance that was just slightly above expectations.
Here’s how the company did in comparison with LSEG consensus:
- Earnings per share: $1.38 adjusted vs. $1.31 expected
- Revenue: $1.18 billion vs. $1.16 billion expected
Zoom’s revenue grew about 4% year over year in the quarter, which ended on Oct. 31, according to a statement. Zoom has increased revenue in the single digits for two and a half years, a sharp departure from 2020 and 2021, when the Covid-19 pandemic led the business to triple in size.
Net income, at $207.1 million, or 66 cents per share, was up from $141.2 million, or 45 cents per share, in the same quarter a year earlier.
The company reported 192,400 enterprise customers in the quarter, up 800 customers from the previous quarter.
With respect to guidance, Zoom called for $1.29 to $1.30 in fiscal fourth-quarter adjusted earnings per share on $1.175 billion to $1.180 billion in revenue. Analysts surveyed by LSEG were expecting $1.29 per share and $1.17 billion in revenue.
Zoom bumped up its view for the 2025 fiscal year. It expects $5.41 to $5.43 in adjusted earnings per share, with $4.656 billion to $4.661 billion in revenue. The middle of the revenue range implies about 3% growth.
LSEG’s consensus was $5.35 per share on revenue of $4.64 billion. In August, Zoom said it was looking for $5.29 to $5.32 per share and revenue between $4.63 billion and $4.64 billion.
During the quarter, Zoom said in the first half of 2025 it will release a premium Custom AI Companion that could connect to corporate glossaries and services such as ServiceNow and Workday. Zoom also started offering single-use webinar options, with room for up to one million attendees.
As of Monday’s close, Zoom stock was up about 24% this year, while the S&P 500 index had gained 25%.
The company also said its corporate name is changing from Zoom Video Communications to Zoom Communications Inc.
“This change reflects our evolution into an AI-first work platform for human connection and our vision for long-term growth,” Zoom’s founder and CEO Eric Yuan said on a conference call with analysts.
Technology
San Francisco Mayor-elect Daniel Lurie taps OpenAI’s Sam Altman and other business leaders for help with transition
Mayor- Elect Daniel Lurie speaks in St. Mary’s square a day after winning the Mayoral race in San Francisco on Friday, Nov. 8, 2024.
Gabrielle Lurie | San Francisco Chronicle | Hearst Newspapers | Getty Images
San Francisco’s Mayor-elect Daniel Lurie has begun tapping tech heavyweights and business leaders to help with his goal of overhauling the city’s image. His transition team includes OpenAI CEO Sam Altman and former Twitter CFO Ned Segal.
Lurie, a centrist Democrat and Levi Strauss heir, ousted incumbent London Breed in a closely-watched race and will step into the role in 2025. San Francisco-based companies need to invest in the city and commit to their communities, Lurie told CNBC in an interview. He named both Visa and Salesforce as models for this “two-way street.”
“I’ve had great conversations with Sam Altman,” Lurie said. “He wants to put down roots here in San Francisco. We want to lean into being the home of AI, which we are, and I will continue to invest in that.”
The city can’t have all its eggs in one basket and needs to expand into other business sectors as well, Lurie said.
“We will go recruit companies from all sectors to come back to San Francisco,” Lurie said. “Whether it’s healthcare, whether it’s technology [or] whether it’s arts and culture, we want to be the number-one spot for business again in this country.”
Lurie, who founded the homelessness nonprofit Tipping Point, has plans that include declaring a state of emergency over the fentanyl crisis on day one in office and a previously disclosed proposal to build 1,500 shelter beds within his first six months in office. A fully-staffed police department and 911 dispatch office will be necessary to help bring businesses and workers back to the city, Lurie said.
“We need to make sure we get our behavioral health crisis under control, which means we need to build more mental health and drug treatment beds,” Lurie said. “We have to get people off the streets. We have to do that compassionately, but we also have to send a message — and we are — to the country and to the world that San Francisco is no longer a place that you come to deal drugs or to do drugs or to sleep on our streets.”
Lurie added, “We didn’t get into this overnight, and it won’t be fixed overnight.”
Part of the solution he envisions will be bringing workers back to offices, modeling that goal with his administration. Lurie says his team will be in five days a week, and he hopes that the administration’s work in cleaning up streets will entice others to do the same. More affordable housing will also be a priority to ensure workers can afford to live in the city, he said.
He’s also hopeful that future events the city will host in the next year and a half — from the JPMorgan Healthcare Conference to the 2025 NBA All-Star Game and Super Bowl LX in 2026 — will help invigorate the city.
“I’ve talked to Jamie Dimon,” Lurie said. “I talked to the commissioner of the NBA. They all want San Francisco to come back.”
Lurie’s election is part of a wider trend in the state of moving to the right of progressive policies and leaders of the past. More conservative district attorneys were voted into office in major counties, including Nathan Hochman in Los Angeles, while Alameda county District Attorney Pamela Price and Oakland Mayor Sheng Thao faced successful recalls. California voters also adopted a proposition that increases penalties for certain drug and theft crimes while rebuffing a measure to raise the state’s minimum wage to $18 an hour. Up and down the state, voters’ focus was on the economy, according to polling from the Public Policy Institute of California, which found the economy, cost of living and inflation were the key issues for 35 percent of voters this cycle .
“In some ways it’s remarkable that California remained as much of a blue state and Democratic stronghold as it is considering the way people were feeling about their own financial circumstances, especially compared to four years ago,” Mark Baldassare, PPIC’s survey director, said.
This comes as California Gov. Gavin Newsom has convened a special legislative session next week in an effort to prepare the state and safeguard policies around climate change, reproductive rights and more ahead of President-elect Donald Trump’s return to the White House in January.
Lurie told CNBC that he disputes the “shift to the right” narrative in the city, adding that his biggest challenge will be combatting the cynicism around what San Francisco has become.
“What we have done in San Francisco is get back to common sense with this election,” Lurie said. “It’s about getting results for the people of San Francisco — allowing people to struggle and die in our streets is not progressive.”
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