APP fraud totalled almost £341m last year

The Payment Systems Regulator (PSR) has warned that reimbursement for those tricked into transferring money to fraudsters still largely depends on who the victim banks with.

PSR data on authorised push payment (APP) scam reimbursement show that victims reported 252,626 cases of APP scams in 2023, with these totalling nearly £341 million. Under the existing voluntary reimbursement framework, 67% of money lost to APP scams was reimbursed, marking an increase on the 61% that was refunded in 2022. The PSR found that some banks fully reimbursed victims, while others only made partial refunds or accepted claims in narrow circumstances. Nationwide fully reimbursed 96% of the APP scam cases reported to it, while TSB fully reimbursed 95% and Barclays fully reimbursed in 82%. Only 3% of cases reported to AIB were fully reimbursed, while Danske Bank fully reimbursed 7%, and Monzo fully reimbursed 9%. The PSR plans to introduce mandatory reimbursement measures for APP claims worth up to £415,000 in October.

The findings include the UK’s 14 largest banking groups, along with the data for eleven other smaller firms that were in the top 20 highest receivers of fraud. The smaller firms are included as they represent a disproportionately high level of fraud received.

David Geale, Managing Director of the PSR, said “Today’s report highlights how payment firms tackled APP scams and the way they treated those who fell victim in 2023. We can see some positive changes with more victims being reimbursed than in 2022. But there is still more to do – particularly for some smaller firms which have much higher rates of receiving fraud than larger firms.

“Our new mandatory reimbursement measures will dramatically increase protection for consumers. These come into effect on 7 October 2024, and we are already seeing payment firms innovating and improving their controls, which is key to preventing scams from happening in the first place.”

Ben Donaldson, Managing Director of Economic Crime at UK Finance said “The financial services sector invests more in countering fraud than anyone else and is the only sector that reimburses victims. Today’s data from the PSR shows reimbursement increased and the majority of authorised push payment (APP) fraud is reimbursed.

“Reimbursement is important in the fight against fraud, but it does not solve the problem on its own – victims still suffer the same psychological impact and criminals still get the stolen money, which causes further harm to society.

“Our focus has to be protecting consumers in the first place and that means looking at where fraud originates. Our data shows that over 90 per cent of APP fraud starts online or over the phone, through social media, fake messages and calls.  Despite this, the technology and telecommunications sectors bear no responsibility for reimbursing victims. That needs to change and these sectors also need to tackle the criminal activity that proliferates on their platforms, sites and networks.”

Lending Standard Board (LSB), Chief Executive Emma Lovell said “Since the introduction of the CRM Code, there has been good progress on tackling APP fraud in the financial services sector. As the PSR notes, the firms signed up to the Code have driven an improvement in reimbursement rates, and data from both the PSR and UK Finance shows signatory firms perform better than non-signatory firms on reimbursement.

“Crucially, the Code covers prevention and detection requirements, as well as reimbursement. The performance of the Code signatories demonstrates that a consistent, independently overseen approach to APP fraud detection and prevention can make a significant difference to preventing customer harm. The incoming PSR framework does not include specific provisions on prevention and detection, so it’s important the sector builds on the lessons from the CRM Code and continues to prioritise stopping this type of fraud from occurring in the first place.”