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New code to tackle payment scams starts today

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28/05/2019
The Authorised Push Payment (APP) Scams voluntary code of good practice comes into effect today.

APPs are made when people request their bank or building society to make a payment from their account to another account. The new code is designed to prevent scams where consumers are tricked into authorising a payment to an account that they believe belongs to a legitimate payee – but is in fact controlled by a scammer.

Payments related to APP scams can be made over the phone, online, or in person, and most are instantaneous.

Statistics released by UK Finance in September 2018 showed that, in the first half of 2018, consumers lost £92.9 million due to these authorised push payment scams.

The Authorised Push Payment (APP) Scams voluntary code of good practice comes into effect today.

APPs are made when people request their bank or building society to make a payment from their account to another account. The new code is designed to prevent scams where consumers are tricked into authorising a payment to an account that they believe belongs to a legitimate payee – but is in fact controlled by a scammer.

Payments related to APP scams can be made over the phone, online, or in person, and most are instantaneous.

Statistics released by UK Finance in September 2018 showed that, in the first half of 2018, consumers lost £92.9 million due to these authorised push payment scams.

The new Code sets out the agreed principles for greater protection of consumers and the circumstances in which they will be reimbursed.

Signatories to the code agree to:

  • protecting their customers, including procedures to detect, prevent and respond to APP fraud, with a greater level of protection for customers considered to be vulnerable to this type of fraud; and
  • preventing accounts from being used to launder the proceeds of APP fraud, including procedures to prevent, detect and respond to the receipt of funds from this type of fraud.

All of the major banking groups have signed up – including HSBC, Lloyds, Metro Bank, Nationwide, RBS, Santander and Starling Bank.

Stephen Jones, chief executive of UK Finance, said: “Defending customers from fraud and preventing stolen money from going to criminals is a core priority for the finance industry. The launch of this voluntary Code is a significant moment, bringing a new level of protection from authorised push payment (APP) scams. From today, firms who have signed up to the code have committed to new standards of consumer protection and to reimbursing the victims of these scams, provided the customer has met the standards expected of them.

“In situations where both the customer and their payment service provider meet the required standards set out in the Code, a customer of a firm signed up to the Code who falls victim to APP fraud will still receive their money back. To fund this compensation to victims, as an interim arrangement a number of the launch signatories of the Code have established a fund to provide reimbursements from implementation until a new long-term funding arrangement is in place no later than the end of this year. We are working with the regulators and government to establish this mechanism before the end of the year. 

“Meanwhile the industry continues to invest billions in tackling economic crime and protecting customers – developing sophisticated security technologies, helping law enforcement apprehend the criminals responsible and assisting the government in improving fraud intelligence sharing.”

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