Bank transfer scam victims to be refunded under new rules

Published by Stephen Little on 01 March 2019.
Last updated on 01 March 2019

People tricked into transferring bank payments to fraudsters in 'authorised push payment' scams will find it easier to get their money back under new plans.

Authorised push payment scams happen when people are tricked by a fraudster into authorising a payment to be made to another account.

The new code of conduct sets out that from 28 May providers will cover losses for people who have been tricked into transferring their money to criminals in this way.

Retail banks that are members of the initial 'steering group' have begun to implement the new code, including:

  • Barclays
  • Lloyds Banking Group
  • HSBC
  • Metro Bank
  • Royal Bank of Scotland

Other providers are also now being encouraged to sign up. 

The code drawn up by the Payment Systems Regulator (PSR) aims to reduce push payment fraud and give better protection to consumers.

Unlike credit card scams, victims of authorised push payment fraud have not been entitled to the same level of protection.

Banks frequently refuse to refund victims of this type of scam on the grounds that they authorised the transaction.

Under the new voluntary code banks have to reimburse consumers for their losses provided they have taken reasonable care.

Figures from UK Finance show that during the first half of 2018 consumers lost £145.4 million because of authorised push payment scams, while just £31 million was returned.

Criminals are becoming increasingly sophisticated. With push payment fraud criminals pose as someone who has been employed by the victim, such as a builder of solicitor.

The criminals then send the victim a fake invoice to get them to send money to a bank account controlled by the fraudster.

Katy Worobec, managing director of economic crime at UK Finance, says: “Protecting customers from the threat of authorised push payment scams and stopping money going to criminals are the finance industry’s foremost priorities.

“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.

Ruth Evans, chair of the steering group set up by the PSR, says: “Authorised push payment fraud is a crime that can have a devastating impact on victims and this voluntary code is a major milestone in protecting customers.

"With payment service providers and consumer groups working together to create a lasting and fair solution for all, the code will also help to stop these scams occurring in the first place.

“For the first time under the Code any customer of a signatory payment service provider will be fully reimbursed if they are the victim of an APP scam, met the standards expected of them and their provider did not meet the standards expected of them under the code.”

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I recently switched banks.

I recently switched banks. Onthe day the switch was completed, the bank I was switching from sent me a letter warning that someone had decided to switch my account and if this was not me I should ring them immediately. The letter was dated 7 days earlier. The letter to be sent to me two days before the transfer was completed has yet to appear and as yet I have not received their final statement. I wonder what would have happened if it had not been a request from me? Would I have been compensated or would it have been my fault?