Crackdown on bank transfer scammers

The 100 people and companies tricked each day into sending money to fraudsters could find it easier to claim compensation under new proposals.

The Payments System Regulator set out reforms relating to bank transfer scams, while new data for the first time revealed the scale of what bankers say is a growing menace.

The average individual victim loses £3,027 and the average business victim £21,477, according to a study by UK Finance, the trade association.

In total, 19,000 so-called authorised push payment (APP) scams were carried out in the first six months of 2017, with fraudsters duping bank customers out of £101 million.

However, £25.2 million was returned to the victims, a compensation rate that the regulator said it wanted to increase. It is consulting on a number of initiatives, including a reimbursement scheme and making it harder for fraudsters to open accounts used for scams.

A new reimbursement scheme is envisaged under which victims could be compensated by banks or payment service providers found to have fallen short of new standards and where the victim is deemed to have taken sufficient care.

Which?, the consumer body that tabled a super-complaint demanding action, welcomed the proposals but said banks had been let off the hook by the regulator ruling that they had no formal liability.

The body argued that banks should reimburse victims of bank transfer fraud in the same way they already did for scams involving credit cards, debit cards and direct debits.

An APP scam is where the account holder instructs their bank to transfer money to another account after being tricked into believing the destination account is legitimate. Sometimes the consequences can be devastating, as when money for a house purchase is sent to a fake solicitor or when a firm pays a fake invoice.

Hannah Nixon, managing director of the regulator, said there was ‘no silver bullet’ for such scams, but her proposals would make it harder for criminals. She wants to receive feedback from banks on a reimbursement scheme by next September.

“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,” she said.

Procedures by banks and payment processors to respond to victims were often unclear and inconsistently applied the regulator said, while insufficient data had been collected to understand the scale of scams and identify ‘money mules’, the accounts used to receive the proceeds of fraud.


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