The Payment Systems Regulator is putting in place stronger protections and reimbursement measures for victims of APP scams. Read more to find out what these scams entail, what they look like, how to avoid them, the process of getting reimbursement from your bank or paying company if you become an APP scam victim and how banks rank for the level of APP fraud and reimbursements.
Authorised Push Payment (APP) scams, where fraudsters trick victims into sending money directly to their accounts, are on the rise, with £239.3 million lost in just the first half of 2023. The Payment Systems Regulator (PSR) is urging action from financial institutions and implementing new regulations to combat this growing threat.
- New reimbursement requirement comes into force on 7 October 2024
- Upper claim limit will match the FOS upper limit of £415,000 and a claim excess of no more than £100 may be applied
- Finalised consumer standard of caution outlined
What are APP scams?
APP scams involve tricking individuals or businesses into making payments to fraudsters posing as legitimate recipients. This can happen through various tactics, such as:
- Phishing emails and texts: Fake messages impersonate trusted organizations, like banks or delivery companies, to lure victims into making payments.
- Fake investment schemes: Fraudsters promise high returns on fake investments, convincing victims to transfer money.
- Purchase scams: Bogus online marketplaces or classifieds ads offer nonexistent goods or services, trapping victims into payments.
The impact of APP scams:
The financial and emotional toll of APP scams can be devastating. Victims often lose significant sums of money, leaving them with financial hardship and stress. The PSR highlights the urgency of addressing this issue, as APP scams now account for 40% of all fraud losses in the UK.
New regulations to protect victims of APP crime:
Recognising the seriousness of the problem, the UK government has granted the PSR new powers to mandate victim reimbursement for APP scams. This legislation, which came into effect in June 2023, will require financial institutions to reimburse victims for losses incurred through these scams, significantly shifting the burden of responsibility.
What can you do to avoid becoming an APP victim?
The PSR urges everyone to be vigilant and follow these tips to avoid falling victim to APP scams:
- Never share personal or financial information in response to unsolicited emails or texts.
- Double-check the recipient’s details before making any payments, especially for large sums.
- Be wary of unexpected offers or deals that seem too good to be true.
- Report suspected scams to your bank and Action Fraud.
How to apply for an APP reimbursement from your bank
If you’ve unfortunately fallen victim to an APP (Authorized Push Payment) scam, there are steps you can take to try and recover your lost funds. Here are some steps to take:
Act fast:
- Contact your bank immediately: The sooner you report the scam, the higher the chance of recovering your funds. You can call their customer service number or visit a branch in person.
- Tell them exactly what happened: Be clear and concise about the scam, including the date, method, and amount of money transferred. Provide any details you have about the scammer, such as names, phone numbers, or email addresses.
Gather evidence:
- Collect any documentation related to the scam: This could include emails, texts, phone recordings, or screenshots. The more evidence you have, the stronger your case for reimbursement will be.
- Check your hard copy or online bank statement: Confirm the fraudulent transaction and note the receiving bank account details.
Follow your bank’s procedures:
- Each bank has its own process for handling APP fraud claims. They will likely ask you to fill out a form and provide additional information. Cooperate fully with their investigation.
- Ask about their reimbursement policy: Many banks have signed up to the Contingent Reimbursement Model Code (CRM Code), which outlines certain circumstances under which they will reimburse victims of APP scams. However, there are always exceptions and exclusions, so don’t assume automatic reimbursement.
Be patient:
- Processing APP fraud claims can take time, often several weeks or even months. However, that is changing. Reports have said that banks or paying firms should pay APP victims within 5 working days of a successful claim. Keep following up with your bank and provide any updates or additional information they request.
- Don’t be afraid to escalate the issue: If you’re not satisfied with your bank’s response, you can contact the Financial Ombudsman Service (FOS) in the UK or the Consumer Financial Protection Bureau (CFPB) in the US.
Additional tips:
- Report the scam to the police: This will help document the crime and may assist in catching the scammers.
- Change your bank passwords and security settings: Take steps to improve your online banking security to prevent future scams.
- Be cautious about unexpected calls, emails, or texts: Never send money or personal information to someone you don’t know and trust.
Remember, while there’s no guarantee of recovery, taking these steps and acting quickly can increase your chances of getting your money back.
Will you always be reimbursed?
According to the PSR, not necessarily. There will be certain steps that a victim of APP will have to carry out. See how your bank ranks for the level of APP fraud and their level of full and partial reimbursements in our additional resources section at the end of this article.
Here’s what the PSR said:
The PSR also confirms that ‘sending’ payment firms can – but do not have to – apply a claim excess of up to £100 if they choose to. This does not include claims made by vulnerable consumers.
Consumers still need to take care when making payments. Reflecting this, the PSR also set out the circumstances when a bank might reasonably consider a person has not been sufficiently careful. For example, consumers should have regard to interventions (such as warning messages) from their bank; should promptly notify their bank of suspected fraud; share information with their bank to help them assess a claim; and consent to fraud details being reported to the police.
It will not be sufficient for a customer to have merely failed to meet one of these requirements, and the onus will be on the bank to prove that they acted with gross negligence. This is a very high bar, and the PSR expects that a small minority of cases will be subject to this exception. This exception does not apply to vulnerable consumers.
Additional Resources:
- See how your bank ranks for the number of APP scams and the level of reimbursements: APP fraud performance data
- PSR APP scams page: PS23/4: APP scams reimbursement policy statement
- Action Fraud: https://actionfraud.police.uk/