UK Reg Tackles Authorized Push Payment Fraud

In an effort to help authorized push payment (APP) fraud victims, The U.K.’s Financial Conduct Authority (FCA) unveiled new rules on Friday (Dec. 14). As a result, additional banks or payment services providers (PSPs) may have to compensate victims of those kinds of scams, Financial Times reported.

FCA Executive Director of Strategy and Competition Chris Woolard said, according to FT: “The FCA takes APP fraud and the harm it causes to consumers very seriously. Now victims of APP fraud can make a complaint to the PSP receiving their payment, and if they’re not satisfied with the outcome, can refer their complaint to the Financial Ombudsman Service (FOS).” The report also noted that the FOS can have compensation ordered for victims.

Authorized push payment fraud is a case when fraudsters encourage a victim to make money transfer authorizations with methods such as bogus text messages that claim to come from a bank. According to UK Finance statistics, 43,875 instances of the scam took place last year and created losses of £236m. Yet, according to the report, consumer groups are worried that those numbers can be higher than reported.

The news comes after Which?, a consumer watchdog in the U.K., was calling for better protections against push payment scams earlier this year. A press release released by Which? in February warned that APP fraud is on the rise. The watchdog was calling for change in how banks handle this type of crime when it affects their customers.

Which? pointed to the increasing use of mobile and online technologies, along with online banking’s rise, as two major factors behind the APP scam growth. According to the press release at the time, the U.K.’s Payment Systems Regulator (PSR) found that 100 scams hit businesses or consumers every day. “Given the scale and nature of the fraud being committed, in the current system, banks don’t reimburse their consumer and business customers,” the group said in the release.