Regulator launches crackdown on payment fraudsters

7 November 2017

Plans to crackdown on fraudsters who trick consumers into sending them money have been announced by the payments industry watchdog. 

The Payments Systems Regulator (PSR) says more than 19,000 people fell victim to an ‘authorised push payment’ (APP) scam in the first six months of 2017, with more than £100 million taken by criminals.

These scams occur when a con artist pretends to be a trusted person or financial institution and persuades a consumer to transfer money to their account.

The PSR wants to put further protection in place to make it easier for customers to verify who they are sending money to, and to introduce a way of reimbursing the victims of fraud.

As a result, from 2018 banks will make it easier for customers to verify who they are sending cash to – such as by confirming the payee’s name. They will also increase their security checks to make it harder for fraudsters to open an account in the first place.

The regulator is also launching a consultation on the issue as it wants to establish industry standards so that consumers receive the same experience when making a complaint. This would also standardise the amount of compensation victims receive from their bank.

A linked investigation by the Financial Conduct Authority found that the procedures for pursuing scam cases are often unclear and not applied consistently across the industry.

‘There is no silver bullet for APP scams’

Hannah Nixon, managing director of the PSR, says: “There are now a broad range of initiatives that will make it harder for criminals to commit APP scams.

“However, there is no silver bullet for APP scams, and some people will still, unfortunately, lose out. That’s why we’ve continued to look for a solution that could reimburse those who are scammed, and today we begin consulting on an option that we think could work.

“To be successful, the model must be pragmatic: consumers will need to be vigilant and protect themselves, but equally we expect banks and payment service providers to uphold best practice – and when they don’t there should be reimbursement.”

Stephen Jones, chief executive of the UK Finance trade body, adds: “Today marks an important step forward in the battle to fight the serious problem of criminals tricking customers into authorising payments and we are pleased the regulator has acknowledged everything the industry has achieved to date.”

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