The UK has seen an increase in authorised ‘push payment’ fraud over the past few years, and in 2022 victims lost £485 million to such scams, the Government said
Bank transfers could be delayed by up to four days under new laws that will allow banks more time to investigate if they suspect fraud.
Draft legislation will give payment service providers like banks will an extra 72 hours to investigate payments if they suspect fraud or dishonesty and need more time to contact the customer or other parties such as the police. This would be on top of the existing 24 hours they have now to investigate. The new rule will mainly apply to authorised push payments (APPs).
APP scams are when scammers fool victims into starting and approving a transaction, often by pretending to be real organisations like banks, businesses or the police. In recent years, the UK has seen a rise in these types of scams. In 2022 alone, victims lost £485 million in this way,
Until now, payment service providers usually had to process payments by the end of the next business day, which didn’t give them much time to investigate. The Government plans to bring this legislation before Parliament so it can start by October 7. This is also when new protections for consumers against APP fraud will kick in.
Economic Secretary to the Treasury Bim Afolami said: “Fraudsters spin whole webs of lies and fabricate all sorts of things to convince people to send them money this legislation will give banks, other payment service providers and law enforcement more time to get in touch with victims and break the fraudster’s spell before money is sent.”
“The Government is absolutely committed to tackling fraud and recognises the impact of this devastating crime on victims this legislation is another tool in our arsenal to fight fraud.”
In December 2023, the Payment Systems Regulator (PSR) announced new rules to protect people from APP fraud. These rules will start on October 7 this year. Right now, many banks have agreed to a code that says they should pay back money lost to scams, but it hasn’t always worked the same way for everyone. This means getting your money back might depend on which bank you use.
The regulator said its new rules will make a big difference in stopping fraud and will mean most of the money stolen by scammers will be given back to the people who lost it. They also said that the most money you can get back from a scam will be £415,000. You might have to pay up to £100 yourself before you can claim.
This £415,000 limit matches the most the Financial Ombudsman Service (FOS) can give when it looks into complaints. The PSR has also shared plans to make payment firms work harder to stop APP fraud before it happens. They want these firms to share the cost of paying back victims, with “sending” and “receiving” firms each paying half.
