Web giants may face fines for failing to fight the fraudsters

TECH giants could face a new criminal offence of ‘failure to prevent fraud’, in a major victory for the Mail’s Stop the Scammers campaign.

The Commons justice committee has called for a new offence targeted at online and social media companies which do not have systems in place to stop fraud being perpetrated on their platforms.

Security minister Tom Tugendhat yesterday indicated he supported the idea.

He said a ‘ dissuasive power against companies... may well be useful’ and said he would look closely at any proposals that are put forward.

Mr Tugendhat also hinted that the UK’s ‘faster payments’ system – which allows speedy electronic transfers from one bank account to another – could be slowed to reduce its attractiveness to fraudsters. ‘The speed of transactions in the UK is much higher than in most other jurisdictions,’ he told a separate House of Lords committee scrutinising online fraud.

‘We are one of the very few jurisdictions in the world that allows for pretty much instantaneous transfers.’ Asked whether the systems should be slowed down, he said: ‘That is a conversation I know the Treasury are having in different ways.’

The justice committee’s report, published today, said: ‘A failure to prevent fraud offence should be introduced to hold companies to account for fraud occurring on their systems and encourage better corporate behaviours.’ It suggested fines from successful prosecutions for the ‘failure to prevent’ offence could be used to compensate victims of fraud.

If the move is adopted by the Government it would represent a huge step forward for fraud victims’ rights.

The five-point manifesto in our campaign, launched in June, included holding tech giants to account over their role in allowing fraudsters to run amok.

In another major proposal, the committee said fraudsters should get tougher sentences to reflect the ‘emotional and psychological harms these crimes can cause’. The report noted that although fraud makes up 40 per cent of crime, fighting the offence takes up only 2 per cent of police resources. Around 875,000 fraud cases are reported each year – but the Office for National Statistics estimates the true number is 4.6million.