The European Union has approved a new law that will make social media platforms such as Meta and TikTok responsible for financial fraud taking place on their services. The decision is an important step in the bloc’s ongoing effort to regulate major technology companies.
The legislation builds on existing rules such as the Digital Services Act and the Digital Markets Act, which focus on limiting illegal content and preventing powerful technology firms from misusing their influence on the internet.
A key part of the discussion centred on who should be accountable when financial scams occur. Some Members of the European Parliament said both large technology platforms and banks share responsibility, as social media platforms host fraudulent content and banks process the financial transactions. European governments disagreed, saying banks should only be blamed if their own security protections fail.
The final agreement outlines a clear compromise. Banks will be required to reimburse victims when a scammer impersonates the bank or when a transaction is carried out without the customer’s approval. The new fraud liability law comes at a time when social media users across Europe are facing increasing threats from investment scams, impersonation schemes, and misleading advertisements. Under the law, social media platforms must compensate banks if a user is defrauded and it is clear that the platform failed to remove a reported scam.
This legislation adds to the growing regulatory pressure on major technology companies, which have pushed back against the European Union’s strong stance on antitrust enforcement and content moderation. Social media companies that violate the new rules could face significant fines, a concern that has been raised repeatedly by the technology industry. United States President Donald Trump has also criticised the European Union, accusing the bloc of “discriminating” against American firms and treating its regulatory actions as an attack on innovation in the United States.
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