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MPs call for tech giants to reimburse fraud victims for scam ads

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·Finance Reporter, Yahoo Finance UK
·3-min read
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Bitcoin fraud
According to UK Finance, the largest single slice of money lost was to investment fraud, with £135.1m of losses suffered in 2020, a 42% increase. Photo: Getty

The Treasury committee is calling on the government to make big tech firms that dominate internet to reimburse victims of online fraud.

In its report on fraud, scams and economic crime, the Treasury committee urged the government to legislate against online fraudulent adverts and “seriously” consider whether big tech should reimburse those who fall victim to scams on their platforms.

“Placing a responsibility on online companies to reimburse consumers who are victims of online fraud could rapidly transform their approach. The government should seriously consider whether online companies should be required to contribute compensation when fraud is conducted using their platforms,” the report said.

Read more: Tax returns: 2.3 million Brits missed self assessment deadline

MPs are also pushing Downing Street to legislate “urgently” to make reimbursement for victims of “push payment fraud” from financial services firms mandatory.

A total of £479m ($647m) was stolen from people in so-called “push payment scams” — in which fraudsters trick victims into transferring money to them — last year.

“For too long, pernicious scammers have acted with impunity, ripping off innocent consumers with fraudulent online adverts, impersonation scams and dodgy crypto investments,” Mel Stride, chair of the Treasury committee, said.

“Unfortunately, fraud has soared during the pandemic, and as MPs we’ve heard heart-breaking stories of individuals who have fallen victim to these criminals and lost large sums of money.

In a series of recommendations, the report calls for law enforcement to be appropriately resourced to tackle the scale of the problem. It also mentions that the number of agencies responsible for fighting economic crime and fraud is “bewildering”.

MPs suggest a single law enforcement agency “with clear responsibilities and objectives” to fight economic crime.

The committee is also calling for higher company formation fees and Companies House reform in order to prevent fraudsters from hiding their identities behind UK businesses to launder money and conduct crime, and for proper regulation to be introduced to protect consumers from fraud and money laundering in the cryptoasset industry.

Read more: GCHQ tells businesses to bolster security over Russian cyberattack fears

“While the government have made some progress in this area, we’re today calling on them to push harder and act faster on the growing fraud epidemic. Some of our recommendations, such as legislating against online scam adverts, can be implemented quickly. Others, including crypto regulation and Companies House reform, will require a longer-term approach.”

According to UK Finance, the banking industry body, the largest single slice of money lost was to investment fraud, with £135.1m of losses suffered in 2020, a 42% increase. This was stolen from 8,958 people, meaning that the average victim lost £15,081 to these scams.

“Taken together, our proposals give the UK a fighting chance to get back on the front foot and stop these scammers in their tracks,” Stride said.

Watch: What are the risks of investing in cryptocurrency?

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