Starting today, new protections for victims of APP fraud are now in effect, marking a pivotal day for consumer safety in financial transactions.
According to Credit Connect, the new rules, governed by the Payment Systems Regulator (PSR), demand that payment firms, including high street banks, building societies, and smaller e-money firms, implement stringent reimbursement arrangements for victims of APP scams. These scams, where individuals are deceived into sending money to fraudsters, often result in substantial financial and emotional distress.
Under the revised PSR guidelines, affected consumers who are not at fault can expect reimbursement within five business days, with compensation capped at £85,000. This applies to payments made using the Faster Payments service—common for mobile and online banking—as well as the CHAPS system, typically used for high-value transactions like property purchases.
Rocio Concha, Which? Director of Policy and Advocacy, highlighted the significance of these changes, stating, “For too long, victims have been at the mercy of a reimbursement lottery depending on who they bank with. From today, this new scheme should ensure the vast majority of victims are reimbursed and treated in a fair and consistent way if they fall victim to this terrible crime.”
However, Concha also expressed concerns regarding recent adjustments to the policy that reduced the maximum reimbursement limit, fearing it might undermine the deterrent effect on banks and payment firms regarding fraud prevention.
Echoing the importance of prevention, Ben Donaldson, Managing Director for Economic Crime at UK Finance, pointed out that while reimbursement is crucial, it does not address the psychological impacts of being defrauded.
David Geale, Managing Director of the Payment Systems Regulator, elaborated on the objectives of the new rules, emphasizing their role in expediting the recovery process for scam victims and setting a guaranteed protection level. “Our new requirements will see all payment firms involved facing strong incentives to introduce more robust ways of identifying and preventing these scams from happening in the first place. Firms have already made a good start in making changes and we expect to continue seeing new and innovative systems being rolled out to drive fraud out of our payment systems,” Geale noted.
The implementation of these rules is expected to enhance the integrity of the UK’s payment systems and instill greater confidence among consumers, significantly impacting how payment firms manage and prevent APP fraud.
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