Credit, Collections & Insolvency News
Banks will be forced to reimburse anyone who loses more than £100 to bank transfer or payment fraud, under new plans outlined by the Payment Systems Regulator (PSR).
As of next year, victims will get their money back in all but exceptional cases. The regulator said the policy change will incentivise banks and building societies to prevent scams.
APP scams continue to be a problem and have a devastating impact on the people who fall victim. APP scams are now the largest type of payment fraud in the UK. The PSR’s ongoing work identified concerns about outcomes for victims under the current voluntary approach taken by banks and building societies.
Last November, the PSR consulted on a package of measures to combat APP scams, including mandating reimbursement for victims. The regulator is now consulting on specific proposals that would put that mandatory reimbursement in place for all online and mobile payments. In line with protections for other payments and financial services, reimbursement would be on all payments over £100 and subject to an excess of no more than £35. This consultation will ensure the PSR can make the necessary regulatory changes as soon as the law has been changed which will allow the PSR to act on APP scams.
The PSR wants to see the requirements for mandatory reimbursement in place for consumers as soon as possible. Consumers still need to take caution when sending payments, but these proposed measures will have the added protection that most of their larger payments will be automatically protected. Shifts in the way industry carries out fraud prevention will also mean consumers see their account providers stepping in more regularly to prevent fraud, as is seen with card payments.
The regulator is working with Pay.UK – the operator of the Faster Payments system – and the industry to make sure its requirements can be implemented quickly after legislation is passed. In the meantime, banks and building societies should continue to develop their fraud detection and prevention arrangements to respond to the ongoing risk of fraud to their customers.
Chris Hemsley, Managing Director at the PSR said “Fraudsters have continued to devastate the lives of innocent victims through APP scams. We want to see all banks, building societies and other payment providers doing more to prevent APP scams from occurring in the first place. These proposals will mean everyone has more protection from scams.”
“We’ve seen progress over the last few years. Some firms have even gone much further with fraud guarantees, so we know people can be protected effectively. Our proposed rules will see everyone benefitting from strong protections, regardless of who they bank with.”
Responding to the consultation, Mike Haley, CEO of Cifas said “These proposals highlight the critical importance of integrating fraud checks within the customer journey, as well as the effective sharing of data between organisations to prevent crime and protect victims. ”
“Fraud is on the rise, and already this year we are seeing cases filed to the National Fraud Database rise almost twenty percent when compared to 2021. Undoubtably, the current economic crisis will create new opportunities to commit fraud, and so I expect we will see many more members of the public targeted by criminals intent on stealing money and personal information. ”
“By sharing fraud data, our members prevent over £1bn each year being lost in fraud to organised crime and criminals. We continue to work to make an even greater impact on fraud and financial crime by creating new solutions that will better scrutinise payments, protect consumers from APP scams and prevent these losses before they occur.”
