Payments market: we must work together to combat fraud

The European Union hopes to curtail fraud, specifically fraud in which criminals scam clients into making payments. The European Council has reached an agreement regarding amendments to the payment services law. 

Heiner Herkenhoff, CEO at the Association of German Banks, which is serving as the GBIC coordinator this year, states: “Everyone – banks, telecommunications providers and internet platforms – must do their part to combat fraud if any such measures are to be effective. And legal frameworks must reflect this.” He emphasises that criminals continue to refine their scams, establishing new gateways to fraud via social media and other digital communication platforms. Customers must also remain vigilant. “This problem simply cannot be solved without their help,” Herkenhoff continues.  

The GBIC is therefore sceptical of the proposal, which holds credit institutions solely liable in the event that clients are the victims of fraud. Heiner Herkenhoff: “One-sided liability on the part of the banks will not prevent scams; it simply transfers the economic consequences. In fact, this will increase incentives for criminals.”

One positive aspect of the European Council’s position, according to the GBIC, is that they, at least, plan to limit the scope of the expansion of liability. In light of the upcoming negotiations with the European Parliament and European Commission, the GBIC is calling for a more balanced approach to the relationship between prevention and liability. An expansion of liability for banks, if at all, would have to be subject to clear upper limits. And it must be limited to those cases in which scammers plausibly present themselves to consumers as a supposed employee of the bank.

The instruments for effective fraud prevention already included in the European Commission’s proposal must be improved upon further, including by taking the role of telecommunication providers and internet platforms into account.