SCA and Online Safety Bill: Two tools to tackle scams and fraud

Written by Kunal Sawhney, CEO, Kalkine

Financial frauds have been on the rise, with fraudsters turning online, applying technology-enabled methods to commit scams. Recent data suggests that criminals were able to steal over £750 million in the first half of 2021 alone. Keeping all these in mind, the government devised the Strong Customer Authentication’ (SCA) that will kick in from March 14. It aims to reduce fraud while making online card payments. It also makes contactless offline payments more secure.

SCA which is applicable to banks and other payment services providers was initially introduced in 2019 and was scheduled to be introduced on 14 September 2019 is aimed to limit fraud while enhancing the security of payments. It is the requirement of the second Payment Services Directive (PSD2).  In this mechanism, an additional check is required by the banks to confirm the identity of the consumer while the payments.

Almost all online purchases of over £25 will come under the ambit of SCA. The way authentication was done previously for shopping online using a mobile phone, laptop, or tablet would change now. Use of cards are prone to scams; many times card details are copied from the magnetic stripe of the card at a cash machine or in a store and a fake card is created for the means of fraud.

Businesses have been facing fraud as well, refund fraud is something that has become most prevalent for omnichannel retailers in the last some time. Also, they are victims to fraudsters contacting them, pretending to be regular suppliers, and asking to make an urgent transfer.

Online Safety Bill

Recently the government had reinforced its internet safety laws. A wider consultation has been launched on the restructuring of online advertising laws. The bill includes extra priority fraud, the sale of illegal drugs or weapons, hate crime, revenge porn, human trafficking, and many similar other activities.

Social media and search engines to be in the ambit

The draft bill on online safety has a proposal to put social media websites and search engines under a duty of care to restrict the spread of unlawful content on these services. The bill has the provision under which social media and search engines that host user-generated content are required to have a proper system in place to remove illegal content as soon as they come to their notice. Also, they must take additional measures for the most harmful ‘priority’ forms of such content.

As per the new rules’ communications regulator, Ofcom will have wider power to take faster action against the tech firms for default in removing illegal content and can penalize up to 10 per cent of annual worldwide turnover to non-compliant sites. It can block social media and search engine sites accessibility in the UK.

Measures may create some unease at the beginning  

Finance regulator FCA had updated its Strong Customer Authentication, and initially, it may create some anxiety with declined online payments for many if the bank details have not been updated. More checks will be in place hence contact details with the bank needs to be up to date.

These measures are meant to curb the growing problem of fraud, they may irritate initially with an added level to prove the identity of the person if he is permitted to do so, but in the longer run, they are sure to give peace of mind making the payment processes more secure. Similarly, the online safety bill that intends to tackle harmful content online would include measures to stop paid-for scam advertisements appearing by law.

About Lisa Baker, Editor 2359 Articles
Lisa Baker is the Editor of Always Finance, and writes about Business, Finance Technology and Healthcare. Lisa is also the owner of Need to See IT Publishing.