The UK government plans to relax a proposal that would mandate technology companies to reimburse victims in the event of online financial fraud.
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. The government wants a new national fraud strategy 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. All a technology company has to do is promise that the attack will not happen again and show what steps have been taken to prevent it.
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 forcing them to monitor all content to determine if it was fraudulent.
“It would move the UK away from our international competitors and would harm our international tech competitiveness,” the official said.
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 unclear how these moves will go down with the EU, which wants to see stricter measures in place and might see any watering down of British laws as an excuse to remove “safe harbour” rules. At the moment, it is acceptable for European data to be transferred to the UK, but if there is a risk that it could be stolen due to laxer laws, the EU might rethink that.
