Social media companies to be held liable for financial scams under new EU rules

The European Union passed a new law early Thursday morning that will hold social media platforms like Meta and TikTok liable for financial fraud — a major escalation in the bloc’s attempt to rein in Big Tech.

After hours of late-night negotiations, EU lawmakers approved the measure, adding another layer of regulatory pressure on companies that have spent years lobbying Washington to counter the EU’s aggressive antitrust and content-moderation agenda. The law builds on the Digital Services Act (DSA) and Digital Markets Act (DMA), which curbs the spread of illegal content and prevent tech giants like Google, Amazon, and Meta from leveraging their dominance to expand across the internet.

Violating either law can trigger massive fines, something the tech sector — and U.S. President Donald Trump — have repeatedly pushed back against. Trump has accused the EU of "discriminating" against American companies, framing the bloc’s enforcement as an attack on U.S. innovation.

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Much of the final stretch of deliberations centered on who should shoulder the blame when these scams happen. Several MEPs argued that Big Tech and banks share equal responsibility, since platforms host the scams and banks process the money. However, European governments pushed back, arguing that banks should only be held accountable when their own safeguards fail.

The result is a compromise: banks will reimburse victims when a scammer impersonates the bank or when a financial transaction goes through without the customer’s consent, according to the EU release.

The new fraud-liability rules arrive as social media platforms have become the primary target for investment scams, impersonation schemes, and questionable ads of every kind. Under the law, platforms will now be required to compensate banks when a user is defrauded, and it’s clear the company failed to remove a reported scam.