Refund Scheme Launched For Victims Of Authorised Push Payment Fraud

Following the announcement that authorised push payment (APP) fraud had increased by 93% in a year to £354 million in 2018, a number of banks have signed up to an elective refund scheme which has now taken effect.

The nuts and bolts of the scheme will mean that a scammed individual, who is a member of the eight banks currently signed up, will be offered a full refund if the authorised push payment fraud was not their fault.

If the report made to the bank passes the new set of criteria outlined in the scheme, victims will be offered a full refund that will come from a central pot created and financed by the inaugural collective of banking institutions.

Although the scheme is not fully operational, a long-term funding solution is set to be agreed by the start of 2020.

According to the scheme, all outcomes and decisions will be made within three weeks of the crime, with a maximum of seven weeks set for determining complex cases.

The UK Finance report, ‘Fraud the Facts 2019,’ found that this fraud is far too common, highlighting the difficulty in blaming customers of negligence when the tactics employed by fraudsters is so sophisticated, convincing and seemingly genuine.

In fact, the problem has been increasing for years. In 2017, 43,875 attempts were made to convince individuals or businesses to part with their money. However, by 2018, as social engineering tactics and impersonation methods become more sophisticated, this number had grown to 84,624.

Unfortunately, the success rate of authorised push payment fraud saw £354.3 million successfully stolen last year. This represents a significant increase from the £236 million extracted in 2017.

Of the 2018 total, only £42.3 million was repatriated with the customer! When only 11% of APP money is successfully returned to the customer, it means that many are forced to move through an extremely difficult process of working with regulators and lenders to gain access to their stolen money.

Now, it is hoped that any customer that falls foul of cyber criminals in the future will face a less arduous task of having their money returned quickly if they are currently using the following banks:

  • Barclays
  • HSBC (including First Direct and M&S Bank)
  • Lloyds (including Halifax, Bank of Scotland and Intelligent Finance)
  • Metro Bank
  • Nationwide
  • RBS (including NatWest and Ulster Bank)
  • Santander (including Cahoot and Carter Allen)
  • Starling Bank

Those that are already with TSB have enjoyed the assurances and protections of a similar scheme since April 2019 when they launched their TSB Fraud Refund Guarantee, promising to cover and refund innocent customers of any legitimate fraud up to the value of £1 million per claim.

Ruth Evans, independent chair of the APP Scams Steering Group, said:

“Today marks a watershed in delivering increased protections for consumers from authorised push payment scams.

“For the first time, any victim who is a customer of a signatory firm will be fully refunded, as long as they meet the standards expected of them.

“From today, the majority of consumers will be covered by the code.”

Dave Pickering, Chief Executive of the Lending Standards Board (LSB), said:

“Authorised push payment scams have a devastating impact on victims, and the LSB is committed to ensuring that the code works effectively and that signatories fulfil their obligations under it.”

What will this mean for the conveyancing sector? How important is this scheme and protection for innocent victims of APP fraud?

Today's Conveyancer