People who are tricked into transferring money to fraudsters in 'authorised push payment' scams could be reimbursed by their bank for their losses under proposed new rules published today.
Authorised push payment scams happen when people are tricked by a fraudster into authorising a payment to be made to another account.
However, unlike credit card scams, victims of authorised push payment fraud are not entitled to the same level of protection.
During the first half of 2018 consumers lost £145.4 million because of authorised push payment scams, according to figures released by UK Finance earlier this week.
The new voluntary code proposes that banks will have to reimburse consumers for their losses if they have met the requisite level of care.
The code drawn up by the Payment Systems Regulator (PSR) aims to make it tougher for criminals to commit authorised push payment fraud and sets out how consumers can protect themselves and get protection and support from their banks.
Under the code banks will have to take measures to tackle push payment scams, such as:
- Detecting scams through measures such as analytics and training;
- Providing customers with alerts to warn them if an unusually large payment is being made;
- Delaying payment whilst an investigation is conducted and if necessary carrying out timely reimbursement.
However, it has not yet been agreed who will cover the cost of compensation.
The code is open for full consultation until 15 November, with the final voluntary code to be implemented in early 2019.
Ruth Evans, chair of the steering group set up by the PSR, says: “This is a unique initiative bringing together the industry and consumer groups to set out how best we can tackle this issue – and really help those people who’ve become victims of these devastating crimes.
“Importantly, the code asks banks to hold themselves to account and for consumers to take steps to protect themselves.”
Industry trade body UK Finance says it is committed to ensuring consumers are better protected from the threat of authorised payment scams.
Stephen Jones, chief executive of UK Finance, says: “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."
He says it is clear that new regulation is necessary rather than just a voluntary code alone.
Mr Jones adds: “This will ensure that consumers and financial institutions can be certain in what circumstances victims will be compensated and how this compensation is funded in circumstances where all parties have acted reasonably in making the payment.
"We are keen to work with regulators and government to put these measures in place as soon as possible.”