Lloyds tells Big Tech to do more to tackle surge in crypto scams
Lloyds Bank has issued an “urgent warning” to customers over a surge in cryptocurrency scams and called on Big Tech companies like Meta to take more responsibility for preventing fraud on social media.
Data published by Lloyds on Friday showed a 23 per cent rise in crypto scams reported by its group’s customers in the first nine months of 2023 compared to the same period last year.
The victims lost an average of £10,741 each, up from £7,010 last year and more than any other type of consumer fraud.
Fraud makes up 41 per cent of crime in England and Wales and cost Britons £580m in the first half of this year, according to banking trade body UK Finance.
Lloyds estimated that nearly two thirds (66 per cent) of investment scams originate on social media; most commonly Instagram and Facebook.
“Crypto is a highly risky asset class and remains largely unregulated, which makes it an attractive area for fraudsters to exploit. If something goes wrong, you’re unlikely to get your money back,” said Liz Ziegler, fraud prevention director at Lloyds.
“It’s time these tech firms took responsibility for protecting their customers, stopping scams at source and contributing to refunds when their platforms are used to defraud innocent victims.”
Ben Donaldson, managing director of economic crime at UK Finance, told CityAM: “At present, it is the financial sector that leads the prevention activity and reimbursement of all fraud, but as this research reinforces, the majority of scams start online – often on social media platforms.
“To truly shift the dial on the current fraud epidemic, we need tech and telecom firms to step up and do more to tackle the scams that proliferate on their platforms and networks.”
A spokesperson for Meta, which owns Instagram and Facebook, said it recognised its “important role in tackling the industry-wide issue”.
They added: “We don’t want anyone to fall victim to these criminals which is why our platforms have systems to block scams, financial services advertisers now have to be FCA authorised and we run consumer awareness campaigns on how to spot fraudulent behaviour.”
Antony Walker, deputy chief executive of techUK, which represents major technology companies, said its members were already taking “a wide range of active measures to prevent fraud and remain committed to working collaboratively with law enforcement and the financial services sector”.
Scammers have capitalised on a boom in cryptocurrency trading in recent years and most commonly target victims aged between 25 and 34, according to Lloyds.
Fraudsters often pose as an “investment manager” and promise to invest the victim’s payments on their behalf for high returns.
Other types of fraud, like romance or impersonation scams, can also involve crypto payments. “If someone asks for a payment using cryptocurrency, that should immediately set alarm bells ringing,” Lloyds said.
The firm added that it is typically impossible for banks to reclaim victims’ money as customers often make several payments over a few months before reporting the scam.
Lloyds named fintech Revolut as the most common recipient of fast payments made by the group’s crypto scam victims.
“Revolut takes fraud and the industry-wide risk of customers being coerced by organised criminals, incredibly seriously,” a Revolut spokesperson told CityAM
“Without increased intervention, criminals will only step up their efforts to trick people into handing over their money.
“Revolut has robust protections in place for our millions of customers and we analyse over half a billion transactions a month.”
The government launched a fraud strategy in May that plans to reduce levels by 10 per cent on 2019 by the end of next year.
New rules from the Payment Systems Regulator set to come into force next year will hold sending and receiving firms equally liable for reimbursing victims in most fraud cases, which UK Finance has criticised for not holding social media companies responsible for crimes that originate on their platforms.