Online platforms will face financial liability for fraud originating on their sites under new EU payment services rules agreed Thursday morning by European Parliament and Council negotiators.
The provisional agreement holds platforms responsible for reimbursing payment service providers when those providers have already compensated customers defrauded through scams hosted on the platforms. Platforms must remove fraudulent content after receiving notice or face these costs.
The framework introduces advertising restrictions for very large online platforms and search engines. Companies advertising financial services must demonstrate legal authorization in the relevant member state or prove they represent authorized entities. The measure builds on existing Digital Services Act protections.
Payment Provider Obligations
Payment service providers will bear liability for customer losses when they fail to implement adequate fraud prevention mechanisms. The rules apply to banks, payment institutions, technical service providers, and in certain cases, electronic communications providers and online platforms.
Providers must verify that payee names match account identifiers before processing transfers. When discrepancies appear, providers must refuse the payment and notify the payer. Providers must freeze suspicious transactions and treat fraudster-initiated or altered transactions as unauthorized, covering the full fraudulent amount.
The agreement addresses impersonation fraud, where scammers pose as provider employees to deceive customers. Providers must refund complete amounts when customers report fraud to police and inform their provider. Providers must share fraud-related information among themselves and conduct risk assessments with strong customer authentication.
Transparency and Access Measures
Customers receive full fee disclosure before payment initiation. ATM operators must display all charges and exchange rates before transactions proceed, regardless of operator identity. Card payment providers must clearly state merchant fees.
Retail stores can offer cash withdrawals between 100 and 150 euros without purchase requirements, targeting improved access in remote and rural areas. Withdrawals require chip and PIN technology. Merchants must ensure trading names match bank statement entries.
Market Competition
The legislation reduces barriers for open banking services. Banks must provide payment institutions non-discriminatory access to accounts and data. Users receive dashboards controlling data access permissions. Mobile device manufacturers must allow payment apps to store and transfer necessary data on fair terms.
All providers must participate in alternative dispute resolution when consumers choose this option. Providers must offer human customer support beyond automated systems. The agreement requires formal adoption before taking effect.
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by Irfan Ahmad via Digital Information World
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