Anti-fraud and Complaints Handling in UK Payment Service Providers

The UK's Financial Conduct Authority has published a summary of its findings of its review of anti-fraud controls of UK payment service providers, particularly focused on Authorised Push Payment (APP) fraud. Let me know if you need assistance in this area.

E-money and payment institutions should at least consider these findings and recommendations as part of their continuing work on staying ahead of fraudsters, even if they consider their systems to be already robust. There is more detail in the FCA web page, but in summary, they found: 

• an insufficient focus on delivering good consumer outcomes in many of the firms we reviewed 

• management information and actions often focused on commercial risk appetite, rather than customer impact and treatment 

• significant scope in many firms to improve the support provided to victims of fraud including from the first point of contact. In many cases, firms need to do more to enable customers to report fraud easily and promptly 

• poor complaint handling including firms often taking too long to respond to customer complaints 

• customers provided with decision letters that were sometimes unclear, confusing, or included unhelpful and, on occasion, accusatory language 

• limited evidence that firms are appropriately taking account of characteristics of customer vulnerability when making decisions about fraud claims and complaints.

Let me know if you need assistance in this area.

EU Platform to Business Regulation

The European Union regulations for the supply of online platform services to businesses took effect on 12 July 2020 and are known as the "Platfrom to Business" or "P2B" Regulation. The intention is to provide rules creating a fair, transparent and predictable business environment for smaller traders on online intermediation (sales) platforms and search engines that enable those business users to reach consumers. The European Commission has published a Q&A on how the P2B Regulation applies, and these are definitely worth reading. Most of the obligations for platforms who are caught relate to what must be in their terms and conditions, which will be void if they do not comply. The only truly awkward or unusual provision, however, is the obligation to name two or more mediators to whom they are willing to refer disputes that can't be resolved by means of the internal complaint-handling system. Please contact me if you have any queries about the P2B Regulation.

The P2B Regulation applies if you are an online intermediation service or search engine and within the geographic scope, i.e. the target business users or corporate website users:

• have their place of establishment or residence in the EEA; AND 
• offer goods or services through the online intermediation service or search engine to consumers located in the EEA.

This will cover UK (and other non-EEA) intermediation/search platforms even after Brexit if they satisfy these two criteria.

Your services qualify as “online intermediation services” if they meet all of the following requirements:

• they constitute information society services (provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services);
• they allow ‘business users’ to offer goods or services to 'consumers’;
• with a view to facilitating the initiating of 'direct transactions' between the business users and the consumers, regardless of where the direct transactions are ultimately concluded; 
• they are provided to ‘business users’ on the basis of contractual relationships between the provider of the services and the business users.

The most common examples are e-commerce marketplaces, where businesses are active, such as short-term accommodation rental websites where hosts include professionals (e.g. hotels), app stores and social media for business. Small platform operators (fewer than 50 staff and ≤ €10 million turnover) are covered, but are exempt from requirements an internal complaint handling mechanism or specify mediators in their terms and conditions.

Examples of intermediation platforms not covered would include:

• peer-to-peer online intermediation services without the presence of business users, 
• pure business-to-business online intermediation services which are not offered to consumers, 
• online advertising tools and online advertising exchanges which are not provided with the aim of facilitating the initiation of direct transactions and which do not involve a contractual relationship with consumers. 
• search engine optimisation software services
• services which revolve around advertising-blocking software;
• online payment services, since they do not themselves meet the applicable requirements but are rather inherently auxiliary to the transaction for the supply of goods and services to the consumers concerned. 

While this post does not constitute legal advice to be relied on in any way and the position may vary on the specific facts, my initial view would be that a peer-to-peer lending platform would not be included, because businesses are not offering goods or services to consumers, but lending money. In addition, on many platforms the lenders/investors are not acting in a business capacity, some platforms may only be consumer-to-consumer, while on others the borrowers are typically corporations.

Search engine providers are also caught if all the elements of the definition of that term are present:

• a digital service, 
• that allows users to input queries, 
• to perform searches of, in principle, all websites, or all websites in a particular language, 
• on the basis of a query on any subject, 
• in the form of a keyword, voice request, phrase or other input, and 
• returns results in any format in which information to the requested content can be found. 

Search engines do not necessarily have a contractual relationship with their corporate website users.

Please contact me if you have any queries about the P2B Regulation.