Victims of authorised push payment scams to be reimbursed by banks from May

From May this year, victims of authorised push payment scams in the UK will have a greater chance of being reimbursed by their banks thanks to a new voluntary code agreed to between banks and consumer representatives.

In September last year, a report from online payment service Shieldpay revealed that even though victims of online fraud and financial scams lost £608 on average, the amount offered to them by banks as compensation was only £55 with only 37 percent of victims fully compensated by their banks.

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In the same month, industry group UK Finance said that authorised push payment scams carried out by cyber criminals helped them steal £236 million from UK consumers in 2017 and another £145 million in the first six months of 2018.

It added that while payment card fraud accounted for 58 percent of all financial fraud losses last year, authorised push payment scams accounted for 24 percent, and remote banking fraud accounted for 16 percent of all financial fraud losses.

Caroline Wayman, the chief ombudsman, said that considering how sophisticated financial scams and fraudulent operations had become, banks needed to do more to help their customers who were victims of online fraud, rather than blaming the latter for gross negligence.

"Unlike most other complaints we see, complaints about fraud and scams involve – whether it’s accepted or suspected – the actions of a criminal third party. So it’s understandable that, in many cases, both the bank and their customer tell us in strong terms that they’re not responsible for what’s happened.

"We also often hear from banks that their customers have acted with “gross negligence” – and this means they’re not liable for the money their customer has lost. However, gross negligence is more than just being careless or negligent. And as our case studies show, the evolution of criminals’ methods – in particular, their sophisticated use of technology and manipulative “social engineering” – means it’s an increasingly difficult case to make," she said.

Honest victims of authorised push payment scams to be reimbursed

Recently, banks and consumer representatives from across the UK entered into a voluntary code of good practice to reimburse victims of authorised push payment scams "if their bank failed to meet the standards set out in the Code, providing the customer did everything expected of them under the Code".

The voluntary code will come into effect on 28 May this year and from then on, all signatories of the Code will not only protect customers from app fraud by offering a greater level of protection, but will also prevent accounts from being used to launder the proceeds of APP fraud, including procedures to prevent, detect and respond to the receipt of funds from this type of fraud.

"Protecting customers from the threat of authorised push payment scams and stopping money going to criminals are the finance industry’s foremost priorities. This voluntary code is an important step in strengthening requirements for customer protection," said Katy Worobec, Managing Director of Economic Crime at UK Finance.

"It delivers a commitment from all firms who sign up to the code from May to reimburse victims of authorised push payment scams in any scenario where their bank or payment service provider is at fault and the customer has met the standards expected of them under the code.

"It is vital that we get the right outcome for customers and prevent the UK from inadvertently becoming a magnet for fraudsters, while ensuring innocent victims and customers are not penalised for the criminal actions of others.

"This is why the industry has committed to providing initial funding from the implementation of the code in May until the end of 2019 to reimburse customers of signatory firms in those situations where both the customer and their payment service provider met the required standards set out in the code," she added.