UK Banks Bear Fraud Costs. Social Media Profits from Scams.

The arithmetic is brutally simple. British banks foot the bill for fraud compensation whilst the platforms hosting the scam advertisements pocket billions in revenue. Now the payments industry wants the government to rewrite the rules, forcing tech giants to fund fraud prevention proportionate to their role in creating the problem. The upcoming national fraud strategy will reveal whether ministers have the appetite to take on some of the world's most powerful technology companies.

The numbers tell an extraordinary story. British banks and payment firms paid out compensation for fraud losses totalling £44m in 2025 – fraud that predominantly originated on social media platforms. Those same platforms earned roughly £3.8bn from the scam advertisements that generated those losses, according to industry estimates cited by the Payments Association. The tech giants collect the revenue. The banks carry the cost.

This lopsided equation is exactly what the Payments Association wants the government to fix when it publishes its updated national fraud strategy in the coming weeks. The industry body is pushing ministers to extend Britain's economic crime levy – currently applied to certain financial sectors – to cover social media and telecoms companies, forcing platforms like Meta and X to fund fraud prevention efforts proportionate to their role in the scam ecosystem.

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The proposal arrives at a moment when the regulatory ground has already shifted dramatically beneath payment providers. Since October 2024, new consumer protection rules have required banks and payment firms to reimburse victims of authorised push payment fraud, where customers are tricked into voluntarily transferring money to criminals. According to the Payments Association, those providers have reimbursed roughly 87 per cent of fraud losses under the scheme – though that figure covers only a few months of operation.

Where fraud begins and where it ends

What's interesting here is the fundamental mismatch between where scams originate and where liability currently sits. Most APP fraud begins with a seemingly legitimate advertisement on social media – an investment opportunity, a celebrity endorsement, a too-good-to-be-true product offer. Criminals increasingly use AI tools to create deepfakes and voice clones that impersonate trusted brands or public figures. UK shoppers are now exposed to an estimated 185 scam adverts monthly across Facebook, Instagram, X and other platforms, research cited by the association suggests.

Yet by the time a bank spots something suspicious, the customer has already been convinced. Money is moving. The scam has worked. Payment firms are expected to catch fraud at the final moment of transfer, after weeks or months of grooming may have occurred entirely on platforms they don't control and can't monitor.

Payment firms are expected to stop fraud at the point money is transferred when the real crime has been committed upstream, through digital communication and scam advertising.

The scale of the problem provides context for the frustration. Industry estimates suggest the UK generated 95 billion scam ad impressions in 2025, a figure projected to climb to 137 billion by 2030. Juniper Research forecasts that losses from fake advert scams will nearly double from £44m to £84m over the next five years. Mastercard research found that organisations lost an average of $60m (£45m) to payment fraud last year, whilst global fraud losses exceeded $485bn in 2023.

The revenue question nobody wants to answer

The £3.8bn figure for social media ad revenue from scams – approximately ten per cent of total platform advertising income, according to the association – deserves scrutiny. This estimate appears to encompass scam advertisements across UK social media platforms in 2025, though the methodology for calculating revenue specifically generated by fraudulent rather than legitimate ads remains opaque. The figure suggests either a massive volume of scam content slipping through platform verification systems, or substantial click-through rates on fraudulent advertisements, or both.

Either way, the incentive structure creates what economists would recognise as a moral hazard. Platforms earn revenue from advertising. Some proportion of that advertising is fraudulent. The platforms face minimal direct cost when those scams succeed – they don't reimburse victims, and regulatory penalties under the Online Safety Act have yet to bite with meaningful force. Banks, meanwhile, carry the reimbursement liability but have no ability to prevent the initial point of contact between scammer and victim.

The Payments Association wants what it calls a "shared responsibility framework" – liability distributed across the fraud ecosystem based on where criminal activity originates. Under this model, tech platforms would contribute financially to fraud prevention alongside banks and payment companies, likely through an expanded economic crime levy.

That levy already exists. Introduced in 2022 to fund the National Economic Crime Centre, it currently applies to certain financial sectors. Extending it to cover social media and telecoms would represent a regulatory expansion rather than an entirely new mechanism, which may make it politically more palatable than creating fresh legislation from scratch.

What the fraud strategy might actually deliver

Chancellor Rachel Reeves has previously indicated that the government is examining whether tech and telecoms companies should shoulder more responsibility for preventing online fraud. Whether that examination translates into concrete policy measures depends on how much political capital ministers are willing to spend pushing back against lobbying from some of the world's largest technology companies.

The current model makes them insurers of last resort for a fraud epidemic they can't prevent at source.

The upcoming national fraud strategy will signal whether the government views this as a shared infrastructure problem requiring coordinated funding, or whether payment firms will continue absorbing costs for fraud that originates elsewhere. The Payments Association is also calling for legislation enabling broader data sharing between payment firms, telecoms operators, ecommerce platforms and law enforcement – a proposal that would require navigating Britain's data protection framework whilst building cross-sector intelligence capabilities.

For payment providers watching these discussions, the stakes are clear. The current model makes them insurers of last resort for a fraud epidemic they can't prevent at source. The question is whether ministers are prepared to follow the money backwards to the platforms where it all begins – though recent reports suggest the government may be hesitating on making Big Tech pay.

More articles by Ross Williams