UK Regulator Says Banks Should Reimburse Victims of APP Scams

Banks in the U.K. will have to make good on the money their customers lose from the biggest type of payment fraud in Britain under a proposal by the Payment System Regulator (PSR).

In the PSR’s latest consultation, wider protections from Authorised Push Payment (APP) scam losses are proposed as well as further action to prevent APP fraud, according to a Thursday (Sept. 29) press release.

Under the proposal, banks will have to reimburse payments over 100 pounds to customers who fall victim to APP scams and reimbursement will be required “in all but exceptional cases — so more victims will get their money back.”

See also: Authorized Push Payment Fraud Is Fastest Growing Scam for One Good Reason

The PSR set processing costs and fees charged to customers at a maximum of 35 pounds and the time limit for claims at a minimum of 13 months.

“These options may help PSPs ensure their customers take care in making small payments, minimise claims for civil disputes and maintain proportionate costs, while protecting consumers appropriately,” according to the release.

App scams cost bank customers 583.2 million pounds last year, up 39% from 2020, the PSR said. Fraud is the largest contributor to crime in the U.K. and APP scams are now the largest type of payment fraud in the number of scams and the value of losses.

Read more: Congress Drills Bank Brass on Authorized Push Payments Fraud

“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,” PSR Managing Director Chris Hemsley said.

Consumers still need to take the necessary precautions when sending payments, the PSR said in the release, but the proposed measures offer added protection that most larger payments will be automatically protected.