Lloyds Banking Group is calling on tech giants to share responsibility for online scams, with the bank’s research revealing that over two-thirds of all purchase scams are reported by customers on Meta’s platforms.
The bank said purchase scams, where victims are conned into sending money for goods and services that don’t exist, have cost UK consumers £27m this year.
According to Lloyds Bank’s research, 68% of purchase scams – accounting for 40% of total losses – began on Facebook and Instagram.
“Scam offers for clothes, trainers, gaming consoles and mobile phones are common, and the average loss to victims per scam is about £570,” according to Lloyds. It said figures show that a user falls victim to a scam on these platforms every seven minutes.
Banks spend huge amounts of their IT budget on security, but scams like purchase fraud bypass systems because the victims make the payments.
“Banks have been at the forefront of tackling the epidemic of scams, but they cannot fight it alone. It’s high time tech companies stepped up to share responsibility for protecting their own customers. This means stopping scams at source and contributing to refunds when their platforms are used to defraud innocent victims,” said Liz Ziegler, fraud prevention director at Lloyds Banking Group.
She added: “Social media has become the wild west of online shopping in recent years, with very few checks in place to verify who is selling what. This has left consumers increasingly exposed to ruthless fraudsters, with hundreds of new victims targeted every day and tens of millions of pounds flowing to organised crime gangs each year.”
Lloyds Bank said: “…the reality is that almost 80% of scams start in the tech sector. By the time a victim reaches the point of making a payment through their bank account, it is very difficult to detect amongst the billions of genuine transactions which take place each year.”
Ziegler is not the first to call on the tech giants to do more to prevent fraud of this type. In 2021, Anne Boden, founder of digital challenger Starling Bank, called for cooperation between different sectors to clamp down on authorised push payment (APP) fraud.
In a blog post at the time, Boden said other sectors must shoulder some responsibility for APP scams, particularly social media platforms. “Banks invest billions of pounds in tackling economic crime, but we cannot stop it on our own,” she wrote.
“Very often, [social media] accounts are used for advertising for ‘money mules’ for the purposes of money laundering, selling stolen identity and credit card data, phishing, bogus investment scams and impersonation fraud.”
Boden said banks “seem to have become the underwriter of all kinds of fraud that are not really financial fraud at all”.
Lloyds Banking Group said it has invested hundreds of millions of pounds in advanced security systems to protect its customers, alongside employing thousands of staff dedicated to fighting fraud. It said while it already reimburses the majority of scam victims, this does not fully address the “emotional trauma of becoming a victim of fraud, nor does it stop the flow of money to organised crime”.
“Relying on the banking sector alone to detect scams and provide refunds means those platforms where the vast majority of the fraud starts have no incentive to stop it. [We are] calling for technology and telecommunications companies to do more to stop scams at source and play their part in refunding victims of fraud which originates on their platforms,” added the bank.