UK government to relax online fraud measures for tech firms, report
The government is expected to unveil a new national fraud strategy this week
The government is planning to relax a proposal that would mandate technology companies to reimburse victims in the event of online financial fraud, the Financial Times has reported.
The move follows concerns raised by the Treasury and the Department for Science, Innovation, and Technology regarding the proposal's impact on the UK tech industry.
The annual cost of fraud to the UK amounts to billions of pounds. With the advent of online technology, fraudulent activities are increasingly committed via the internet. Unlike in the past, when fraudsters would use phone, mail or in-person interactions, the internet allows them to victimise people from afar, often operating from foreign countries.
The government is expected to unveil a new national fraud strategy this week that aims to foster collaboration between the government, law enforcement and private companies.
It is expected that the measures will introduce a voluntary agreement where the technology sector will commit to tackling online fraud, rather than being held accountable for reimbursing victims.
Last year, Prime Minister Rishi Sunak promised to release a fraud prevention plan, but it was postponed due to reservations about some of the proposed measures.
According to the FT, ministers had earlier proposed to make the tech and telecom sector accountable for compensating fraud victims and removing the existing "safe harbour" principle that protects platforms from liability until they become aware of the content.
However, some worry that this could lead to legal actions being taken against technology companies for the content they host.
Such a situation could leave companies in a position where they are required to monitor all content to determine if it was fraudulent, which a government official described as an arduous task to perform on a large scale.
"It would move the UK away from our international competitors and would harm our international tech competitiveness," the official said.
Another official emphasised the importance of maintaining a balance between policies that promote safety and those that promote growth, adding that it was possible to tackle online fraud without financially hurting the tech industry.
As part of the national fraud strategy's rollout, tech businesses will make commitments regarding the steps they will take to reduce fraud.
These will include changes to platform interfaces to make it easier to detect and report fraudulent content.
Tech companies are already using various techniques, such as blocking scammer IP addresses, scanning images, and using machine learning to identify fraudulent activity.
Certain big tech firms, including Microsoft and Meta, have pledged to implement a "revised advertising onboarding process" to guarantee that UK financial firms who want to advertise with them have been authorised by the Financial Conduct Authority, which is in charge of regulating financial services.
It is anticipated that more technology companies will join this initiative in the coming days.
UK Finance, the trade association for the financial services industry, has urged the technology sector to assume greater responsibility for combating online fraud.
"The majority of APP [authorised push payment] fraud originates in other sectors, particularly online platforms, which is why they must take far greater action to help stop criminals from stealing people's money," it said.
Last month, the government introduced the Digital Markets, Competition and Consumers (DMCC) Bill, which seeks to enforce a new code of conduct on some of the world's most powerful companies.
The new legislation also aims to prohibit the practice of facilitating fake reviews or promoting consumer reviews without implementing reasonable measures to verify their authenticity.
The legislation has also been drafted with the objective of customers being able to terminate subscriptions easily, inexpensively, and promptly, and companies being obligated to notify customers when a free trial or promotional offer is about to expire.
Tech platforms will be subject to other rules on the content they host. Under the Online Safety Bill, large platforms will have a duty to protect users from harmful content, including fraud.