The Payments Association has expressed concerns over the UK’s proposed measures to address fraud which totalled £485m in 2021.
The industry body warns that stringent regulations could stifle the growth of the sector and make the UK a less attractive destination for investment, potentially leading to companies relocating their operations.
The Association’s letter to Lord Dominic Johnson, minister of state for investment, particularly emphasised issues with the Payment System Regulator’s (PSR) proposed rules that require banks and payments firms to reimburse victims of APP fraud within five business days. It is feared that these rules might create more fraud than they reduce, either by encouraging carelessness or facilitating ‘first party fraud’, where two parties deliberately orchestrate a scam to double their money.
The letter also highlighted the passive stance of social media companies on fraud, a significant concern given that approximately 80% of APP fraud originates through online purchases. The Association further criticised the government’s dilution of plans to force big tech firms to reimburse fraud victims, stating that the current Online Safety Bill did not go far enough.
“The steps we have announced will establish a clear set of minimum standards of behaviour and encourage all payment firms to step up their efforts to prevent fraud from happening in the first place. We’re confident our reimbursement requirements will drive the right consumer outcomes while encouraging people to still remain cautious – including through the potential for financial firms to apply a claim excess and introducing a maximum level of reimbursement,” a PSR spokesperson said.
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