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APP Fraud on The Rise – What Are Banks Doing to Reimburse Customers?

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The Payment Systems Regulator (PSR) has published data relating to how much money the largest 14 banking groups paid back to customers following cases of fraud.

The Payment Systems Regulator (PSR) is a Government-backed organisation responsible for making sure payments (by cash, card or cheque) are safe, that there is innovation in the payment systems industry and that the industry is working hard to tackle fraud. The PSR has plans to implement “new rules that will let people see how well their bank is protecting them against APP scams”, a type of crime which, they say, happens more often than any other in the UK.

Authorised Push Payment (APP) Scams happen when a person is persuaded to transfer money from their own bank account to someone else’s, believing the transaction to be genuine when, in fact, they are being manipulated by a fraudster, who may be claiming to be someone else. Unfortunately, the investment, service or product they think they are buying is a scam. Many scam victims don’t realise there is a problem until afterwards, by which time the scammers have moved the money to another account, often overseas, making it difficult to trace or recover.

If you have been scammed in this way, it is important to contact your bank, Action Fraud and the police as soon as possible.

The Payment Systems Regulator has published its Authorised Push Payment (APP) Fraud Performance Report, based on data from 2022, which covers the reimbursement of victims, money sent from each payment firm as a result of APP fraud and money received by each payment firm as a result of APP fraud.

The banks most likely to refund their victims after an APP fraud were:

  • TSB (refunded 91% of the total value lost)
  • Nationwide (78%)
  • HSBC/First Direct (73%)
  • Barclays (70%)

The banks who refunded the smallest percentage of the total value lost were:

  • AIB (10%)
  • Danske Bank (20%)
  • Monzo (22%)
  • Starling (37%)

The report also looked at the percentage of APP fraud cases where customers were fully reimbursed by the banks. The highest figures were:

  • TSB (94%)
  • Nationwide (91%)
  • Barclays (71%)

The lowest percentages for APP fraud reimbursement in full were:

  • Monzo (6%)
  • Danske (7%)
  • AIB (12%)

Monzo, Starling and Metro Bank reported the highest number of APP fraud payments sent (per million transactions). Danske Bank, AIB and The Co-Operative Bank were at the bottom of the list, allowing the least APP fraud payments to be sent.

Details of APP fraud at receiving banks were also reported. These are the banks which fraudsters used to receive money from their victims and are often smaller or less well-known. Firms with the highest APP fraud rate were:

  • Clear Junction
  • BCB Payments
  • Cashplus Bank

Revolut and Wise also made the list, two firms which we have highlighted in the past in relation to financial fraud.

The report listed a number of key points:

“There are currently inconsistent outcomes for customers who report APP fraud to their PSP.”

Some customers are reimbursed in full, others in part, and others find it difficult to have their claim considered in the first place. There should be less variation between banks when new reimbursement measures are introduced in 2024.

“Receiving fraud data shows a high degree of variation and highlights weak controls that fraudsters have exploited.”

Fraudsters receive money from their victims, and newer or smaller receiving banks appear to have higher rates of fraud than those that are larger or more established.

“Firms have started to address gaps in controls, but more needs to be done.”

The PSP was keen to point out that significant improvements have been underway since the end of 2022, and the new reimbursement rules coming into effect in 2024 will go a long way to seeing firms accept liability for reimbursing customers’ losses.

Sarah Spruce, Head of the APP Fraud team at TLW Solicitors, says:

“This report is a real step forward for the financial services industry. Customers can now get a better understanding of which banks are more likely to support their claim for compensation if they have been unfortunate enough to become the victim of an APP scam. The new reimbursement measures have been controversial, with the Treasury Committee complaining that they were not being implemented quickly enough and that a private company (Pay.UK) should not be handling the reimbursement process, and others saying that telecoms and social media companies should also be held accountable, not just banks.

“It will be interesting to see if there is a real upturn in bank customers getting their money back more easily and quickly. It may still be the case, however, that some scam victims will have to take their cases to the Financial Ombudsman Service (FOS), and we can help them navigate this process.”

The Financial Ombudsman Service (FOS) is a Government-backed organisation set up to resolve complaints between financial firms and their customers. If your bank has investigated your APP fraud claim and refused to reimburse you, either in part or in full, you can take your case to FOS for an independent review.

Banks have a duty of care to their customers, ensuring that they allow customers to spend or transfer money as they see fit, but at the same time protecting their money from fraud or scams. They should monitor accounts and be on the lookout for red flags such as payments to new payees, overseas payments, vulnerable customers (such as the elderly or recently bereaved), repeated payments to the same person, or out-of-character (for example, large) payments. The bank can delay or block payments, as well as request more information about the purpose of a payment if they believe any activity to be suspicious.

Taking a claim to FOS can be time-consuming and tricky. There is legal and banking jargon to navigate, as well as the claims and appeals processes. Our team has years of experience in taking similar claims to FOS, and we can help you.

Submit a claim form, and one of our team will be in touch to discuss your options. We will assess your case, and if we decide to pursue your claim, we will work on a ‘no-win, no-fee’ basis. This means that, if your claim is unsuccessful, you will not have to pay us a penny.

If you, a friend or a relative has lost money to an APP fraud scam, please get in touch with our specialist team for a confidential, no-obligation conversation. You can call us on 0800 169 5925, email info@tlwsolicitors.co.uk or complete one of the forms below.

It is important to get advice as soon as possible, as strict time limits can apply.

Minimum case values apply.

Meet Our Team

Meet Sarah, who heads up our experienced Authorised Push Payment Fraud Claims team.

Sarah and her colleagues are on hand to help with your claim.

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