Today, 7 October, marks the start of major new protections for victims of Authorised Push Payment (APP) scams. APP fraud happens when someone is tricked into sending money to a fraudster via bank transfer, which can lead to devastating impacts on its victims and reduce consumer confidence when making payments.
Under the PSR’s new rules, people making payments from one UK account to another using the Faster Payments system (the system used for mobile and online banking) or CHAPS system (the UK’s high value payment system used for some consumer payments such as house purchases) will now benefit from world leading levels of protection against APP fraud.
David Geale, Managing Director of the Payment Systems Regulator, said:
“Today is a very important day in making it quicker and simpler for victims of APP scams to get back money they’ve lost to criminals, with a guaranteed minimum level of protection in place.
“But not only that, our new requirements will see all payment firms involved facing strong incentives to introduce more robust ways of identifying and preventing these scams from happening in the first place. Firms have already made a good start in making changes and we expect to continue seeing new and innovative systems being rolled out to drive fraud out of our payment systems.”
Payment firms are now required to follow the new reimbursement arrangements. This includes high street banks and building societies as well as smaller payment firms, and e-money firms.
For consumers, that means significantly greater protection, including:
- Everyone making a payment via Faster Payments or CHAPS from one UK bank account to another will be covered.
- The vast majority of consumers can expect to be reimbursed within five business days of making their claim, with the new rules seeing over 99% of claims by volume covered.
- People will be covered up to £85,000 as standard, but banks and payment firms can still reimburse above that amount. Firms may also choose to apply an optional excess of up to £100, though this cannot be applied to vulnerable consumers.
- Anyone who suffers a loss exceeding £85,000 can still raise their case with their payment provider and if they remain unsatisfied, they can take their case to the Financial Ombudsman Service. The Ombudsman is independent and looks at each case on its own individual merits.
- The protections will apply to payments made on or after 7 October 2024.
While these new measures are now in force, consumers should still make payments with care and the PSR is keen to make sure everyone understands some of the instances where a claim for reimbursement under the new APP scams reimbursement requirements may not happen.
This includes where consumers are found to have been complicit in the fraud or grossly negligent. Gross negligence is set at a high bar and this exception does not apply to vulnerable consumers. The onus is on banks and payment firms to prove where customers have acted with gross negligence, through ignoring specific, tailored warnings or not responding to reasonable requests for information, for example.
Consumers should also take steps to protect themselves:
Criminals are experts at impersonating people and organisations. It’s important that everyone exercises caution, acts with vigilance and stays alert to warnings from their bank or payment provider. Consumers should use Confirmation of Payee (CoP) which is an account name checking service designed to make sure people are sending the payment to the right person or business. There’s widespread adoption of this service, with over two billion CoP checks having already been made this year. Over 350 more firms will join CoP by the end of October following PSR action.
If someone thinks they have fallen victim to an APP scam, they should report it to their account provider as soon as possible, and within 13 months of making the fraudulent payment. Their payment provider will be able to advise and support them on the claim process. Throughout the process, consumers should:
- Respond to any requests for information from their bank promptly – after checking that the request is genuine.
- Report the details to the police or consent to their provider reporting to the police on their behalf.
If a victim of an APP scam is unhappy with the way their payment firm has responded to their claim, they can raise their case with the Financial Ombudsman Service for a review. The Ombudsman, which can make rulings up to £430,000, looks at each case on its own individual merits.
For more information on how to stay safe, the national Take Five to Stop Fraud campaign has useful advice and guidance.
ENDS
Notes:
- This is a major reform and we will continue to work with businesses after the policy has gone live to support ongoing effective consumer reimbursement. We will also be closely monitoring the impacts of the new requirements once they go live, including undertaking an evaluation of their effectiveness after 12 months of operation.
- The PSR publishes annual APP fraud performance data and has also been collecting fraud origination data. This will help shine a light on the platforms targeted by fraudsters and the report is expected later in 2024.
- The reimbursement requirement protects individuals, microenterprises and charities.
- Where payment firms need more time to gather information to help them with their assessment, they can ‘stop the clock’. For example, firms may need more information from victims to assess their vulnerability to the scam. But to make sure there aren’t any delays in consumers being reimbursed, the payment firm must arrive at an outcome within 35 business days.
- The maximum amount of money people can claim is £85,000 which currently aligns with the Financial Services Compensation Scheme (FSCS) limit and will cover over 99% of claims. Individual firms may choose to reimburse more than £85,000. Where more than £85,000 is lost and not reimbursed, you can raise your case with the Financial Ombudsman Service, which has a compensation limit of £430,000. The Ombudsman looks at each case on its own individual merits. This is a free service and the Ombudsman sets out the process that consumers should follow on its website.
- The new measures cover all types of APP fraud over FPS or CHAPS, which might include impersonation or romance scams, for example.
o Other payment types, including card, cash, and cheque have their own protections in place so are not covered by the reimbursement requirements starting today.
o APP fraud is different to unauthorised fraud, when someone steals your card to make payments, for example. This also has different protections.
o APP fraud is different to civil disputes, which typically involve a consumer paying a legitimate supplier for goods or services that are not received or are defective, where there is no intent to defraud. There are other consumer protections available for civil disputes under the Consumer Rights Act.
