Banks will have more time to investigate fraudulent authorised push payments made to scammers under fresh legislation.
The Government has amended its proposals so that if providers have reasonable grounds to be suspicious, they have three days to contact the relevant parties (including law enforcement) to decide whether a payment should proceed.
Previously, banks had to process any suspected scam payment by the end of the following business day under Payment Service Regulations (PRS) 2017.
Now, if the bank suspects dishonest or fraudulent activity, it must inform customers of the reason behind a payment’s delay and what action is being taken. Providers will also have to pay for any interest or charges incurred by the customer resulting from a delay.
The Government notes this is to help ensure that consumers and businesses do not incur any costs as a result of any delays to their payments,
The Payment Services Regulation targets authorised push payment (APP) fraud, where a bank account holder is deceived into sending money to a scammer. One example may be where a payment is made to a scammer for a fake listing online about a product that doesn’t arrive or even exist.
The Government intends to present the proposals to Parliament this summer after it engages with financial services industry and hopes it becomes law by October.
After money lost to scammers in the UK more than doubled to £2.3bn in 2023, the Government has appeared to step up its efforts in its fight against fraudsters.
Government steps up scam prevention efforts
In February, it launched a campaign for people to be vigilant to scammers posing as online retailers and courier services. As well as TV adverts, billboards and social media messaging with the slogan ‘Stop! Think Fraud’, it also created an online hub with helplines and support for fraud victims.
The efforts follow new rules from the Payment Systems Regulator (PSR), which aims to reimburse victims of APP fraud better.
From October, banks and other payment firms will be able to reimburse defrauded customers to a maximum of £415,000 – matching the upper limit of the redress suggested by the Financial Ombudsman Service (FOS) for financial disputes.
As part of the rule change, customers still need to have considered warning messages from their banks over suspected fraud, but the threshold for providers not to refund their customers in those instances will be high.
The Government said it has adopted this new authorised push payment legislation “as a priority, on an accelerated basis.”
‘Fraudsters spin whole web of lies’
Bim Afolami, economic secretary to the Treasury, 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.”
