TSB has become the first bank in the UK to compensate customers in the event of them becoming victims of various types of digital fraud such as authorised push payment fraud or unauthorised transaction fraud.
Over 5.2 million customers of TSB will benefit from the bank's new "Fraud Refund Guarantee" programme that aims to financially compensate innocent victims of fraud which, following the digitisation of banking processes, has grown both in terms of scale and reach.
Last year, UK Finance revealed that the UK saw as many as 43,875 cases of authorised push payment scams in 2017 that impacted a total of 42,837 UK consumers. Such scams involve scammers tricking consumers into authorising payments to them and since consumers authorised such fund transfers themselves, they often struggled to recover the amount from their banks.
Financial losses due to various types of fraud such as remote purchase (card-not-present) fraud, counterfeit card fraud, lost and stolen card fraud, card ID theft, retainer face-to-face card fraud, phone banking fraud and online banking fraud totalled almost £732 million in 2017 and combined with £236 million lost to authorised push payment scams, total losses incurred by UK citizens and businesses almost touched £1 billion.
All banks to compensate victims of authorised push payment scams from May
Earlier this year, 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.
TSB first to offer full compensation to victims of fraud
TSB has become the first bank to offer full compensation to victims of fraud ahead of the deadline and said that TSB’s customers will be refunded for any loss they’ve suffered from their account as a result of third-party fraud.
"The vast majority of fraud claims across UK banking are from innocent victims of fraud, who have been targeted by criminals and organised gangs. However, all too often these customers must fight to be refunded and are not treated as victims of crime," said Richard Meddings, Executive Chairman of TSB.
"We want to provide peace of mind to our customers, that’s why we’re proud to announce the TSB Fraud Refund Guarantee. If a TSB customer innocently suffers a fraud loss on their account after being targeted by a criminal, we’ll cover it," he added.
"TSB’s pledge will come as welcome news to its customers. Fraud is only becoming more sophisticated as hackers continue to target vulnerable channels such as digital and mobile, users simply cannot be expected to foot the bill any longer – especially when there are often life-changing sums of money at risk," says Mark Crichton, senior director, security product management at OneSpan
"By promising to compensate customers who fall victim to all types of fraud (including authorised payment fraud), this should further incentivise banks to implement measures to prevent attacks from happening in the first place.
"We’re witnessing huge developments in preventative technology, including innovations in adaptive authentication, biometrics and behavioural techniques to tackle the UK’s billion-pound fraud problem. To get ahead, risk-based systems that can analyse vast amounts of channel-driven data and detect fraud in real-time are crucial for banks to adequately defend against attacks and buck fraud trends," he adds.