It said awareness programmes by the financial services industry had been “ineffective” and insufficiently funded, and set out a series of recommendations for changes.
The influential group of MPs also hit out at how the government has handled the issue noting its response had been “too slow” and that it was now too big for it to handle alone.
In its report into online fraud, the committee said: “Urgent action from government is needed, yet the Home Office’s response has been too slow and the banks are unwilling to share information about the extent of fraud with customers.
“The balance needs to be tipped in favour of the customer. Online fraud is now too vast a problem for the Home Office to solve on its own, and it must work with a long list of other organisations including banks and retailers, however it remains the only body that can provide strategic national leadership.”
Banks not doing enough
On banks, the committee was direct and uncompromising in its criticism.
“Banks are not doing enough to tackle online fraud and their response has not been proportionate to the scale of the problem. Banks need to take more responsibility and work together to tackle this problem head on,” it said.
“Banks now need to work on information sharing so that customers are offered more protection from scams. Campaigns to educate people and keep them safe online have so far been ineffective, supported by insufficient funds and resources.”
The report also called for the Home Office to make banks more responsible.
“The Department must also ensure that banks are committed to developing more effective ways of tackling card not present fraud and that they are held to account for this and for returning money to customers who have been the victims of scams,” it added.
Investing hundreds of millions
Trade body UK Finance said it was not happy about the current safeguards for sharing data.
Chief executive Stephen Jones said: “The banking sector is committed to preventing customers falling prey to financial scams, investing hundreds of millions every year to tackle this growing issue and preventing £6 out of every £10 of fraud.
“The fight against fraud and scams requires public and private sector organisations to work together. Sharing information between institutions is an essential part of the fight but current legislation does not provide adequate safeguards to allow this.
“We want to build on our current close partnership with the government and regulators to make the changes necessary to protect customers and prevent more scams without slowing down genuine transactions, and to make it clearer to customers when they can expect a refund if they have been the victim of payment fraud,” he added.
The committee highlighted six key points and made recommendations to tackle them:
Banks do not accept enough responsibility for preventing and reducing online fraud and there is no data available to assess how well individual banks are performing.
Recommendation: The Department should set out minimum standards for banks to follow on preventing online fraud and on protecting bank customers and require banks to report to government on their performance. The Department should press the banking industry to make relative online fraud vulnerability performance data publicly available. We expect the Department to provide us with a plan for publication of this data by Spring 2018. We encourage banks to develop a voluntary scheme in the meantime to be more open with customers about the extent of fraud and how they are tackling it.
Unless all banks start working together, including making better use of technology, there will be little progress on tackling card fraud and returning money to customers.
Recommendation: Working with Joint Fraud Taskforce partners, the Department should make sure all banks make better use of technology and information to reduce card fraud and return money to customers. This should include establishing minimum technical standards for strong customer authentication for electronic payments.
We are not convinced that current awareness campaigns such as Take Five are proving effective.
Recommendation: The Department, working with others on the Joint Fraud Taskforce, needs to develop a more informed approach to its education campaigns — being specific about what it is trying to achieve, evaluating what works best, and looking at opportunities for campaigns more targeted at specific groups.
The Department has not yet put in place effective arrangements for its oversight of a coordinated and effective response to online fraud and for reporting on its progress.
Recommendation: The Department should develop specific plans for how it will measure progress in tackling online fraud and judge the success of the Joint Fraud Taskforce, and it should regularly publish information on progress and performance. It should update us on progress by the end of March 2018.
The Department lacks data to judge whether its response to tackling online fraud is working.
Recommendation: The Department must prioritise efforts to improve the collection and reporting of data on fraud. It should update us on progress by the end of March 2018, when we also expect to hear how it is improving information sharing between government, industry and law enforcement, and working with Action Fraud to reduce the gap between reported and actual fraud.
The response to tackling online fraud is variable across different police forces, and for some it is not a priority.
Recommendation: The Department should, with the City of London Police, establish what more they can do to help all police forces tackle online fraud, including opportunities to identify, develop and share good practice in a more systematic way.