Big tech giants should reimburse victims of online fraud

Fraudsters have been using innovative methods to defraud the common and gullible people of their hard-earned money, especially the new entrants in the use of digital platforms who are not entirely familiar with the techno-financial ecosystem.

Fraudsters create a third-party phishing website which looks like an existing genuine website, such as - a bank’s website or an e-commerce website or a search engine, etc. Links to these websites are circulated by fraudsters through Short Message Service (SMS) / social media / email / Instant Messenger, etc.

Many customers click on the link without checking the detailed Uniform Resource Locator (URL) and enter secure credentials such as Personal Identification Number (PIN), One Time Password (OTP), Password, etc., which are captured and used by the fraudsters.

Recently, Lloyds, Santander, Barclays, TSB demand Google, Facebook reimburse online fraud victims. While banks have signed up for a voluntary code to reimburse fraud victims who do enough to protect themselves, there is not sufficient regulation governing social media and other websites where victims are often first lured in.

Big tech companies whose online platforms carry advertisements for scams should be made to reimburse victims, British lawmakers said, as part of wider efforts to combat a growing epidemic of online fraud in Britain.

Citing the ‘polluter pays’ principle, a widely recognised concept where those that generate pollution should cover the cost of controlling the risk and the human impact, TSB, Barclays, Santander, and Lloyds have called out Facebook, Instagram, Google, and telecom organisations for not paying anything towards losses.

Experts pointed out that “partial or total” compensation from technology firms was long overdue. Authorised fraud doesn’t start and end with banks, other sectors play a role in facilitating it. The steps some tech giants have taken to help prevent scams are welcome, but they also need to help with the cost.

Social media brands like Facebook and Instagram, alongside Google, and telecom companies, do not currently pay any compensation to victims of fraud. The report says that research from Barclays found that over 75% of online scams occur on social media, auction sites, or dating apps.

All companies and sectors involved in enabling scams should be mandated to regularly publish their data, including what action they are taking and contribute to victim compensation.

In India, The National Payments Corporation of India has introduced detailed guidelines for banks to redress frauds perpetrated on customers and merchants where a misuse or an error in biometric data or UIDAI seeding on Aadhaar Enabled Payment System have led to loss of funds

But the question is – are Indian banks following the guidelines and reimbursing the scam victims on time and another question is when a bank shares all the information to the respective authorities, is the bank signing to protect you against any cyber incidence?