The new rules, that took effect on 7th October 2024, set by the Payment Systems Regulator (PSR), will offer better protection to those who fall victim to such scams.
What are authorised push payment scams?
APP scams occur when individuals are tricked into transferring money directly to scammers. These scams often involve social engineering tactics, with fraudsters posing as trusted individuals or legitimate entities such as banks, HMRC, or even family members in distress. Unlike many scams where funds are withdrawn without the account holder’s consent, APP scams involve victims making the payment themselves, making the transaction much harder to reverse. Examples of APP scams include:
- Invoice fraud: Businesses or individuals receive fake invoices from scammers posing as trusted suppliers, often with altered payment details.
- Impersonation fraud: Fraudsters pretend to be bank representatives, the police, or government agencies, convincing victims to transfer money to a “safe account” due to supposed security issues with their bank account.
- Romance scams: Using dating platforms, scammers build trust over time and eventually fabricate emergencies, asking for financial help that is never repaid.
New rules on app scam reimbursements
As APP scams have become more prevalent, the need for enhanced consumer protection and financial recourse has grown. On 7th October 2024, the Payment Systems Regulator introduced new rules on APP scam reimbursements. Here’s what has changed:
- Increased protection and reimbursement requirements: Banks and payment service providers (PSPs) are now required to reimburse victims of APP scams in many cases, especially where the scam involves significant manipulation or deception by the fraudster. This new requirement is intended to improve trust in digital payments by ensuring that customers are better protected when these scams occur.
- Standardised reimbursement limits: Under the new rules, reimbursement caps are set at £85,000 per scam incident, which aims to cover a large percentage of high-value transactions commonly targeted by scammers. This cap means that individuals and businesses now have a greater safety net in cases where large sums of money are involved.
- Fair treatment and assessment criteria: The rules also set out specific criteria for how banks must assess each case of APP fraud, considering factors such as the vulnerability of the victim and the complexity of the scam. The emphasis is on ensuring that banks treat victims fairly and that individual circumstances are fully considered.
- Transparency and reporting requirements: Financial institutions must maintain detailed records and report instances of APP scams, along with their decisions on reimbursements. This transparency aims to foster accountability among banks while also giving regulatory bodies clearer insight into the effectiveness of the measures.
How to stay protected against APP scams
With APP scams being increasingly sophisticated, vigilance and proactivity are essential to staying protected. Here are some preventative tips to consider:
- Verify all payment requests: Before transferring funds, verify the request’s legitimacy by contacting the individual or company directly using official contact details. For businesses, implementing internal checks and processes for verifying payment details can also be effective.
- Look out for red flags: Scammers often use high-pressure tactics, like claiming urgent action is required. Be wary of unsolicited calls or messages that require immediate transfers.
- Use banking tools for security: Many banks now offer features such as payee name verification and two-factor authentication. Use these security options wherever possible.
What do I do if I’ve been a victim of an Authorised Push Payment scam?
If you’ve been a victim of an Authorised Push Payment scam, it’s crucial to act quickly. First, contact your bank's fraud department immediately to report the scam and request guidance on next steps. You should also report the incident to Action Fraud, the UK’s national fraud and cybercrime reporting centre, to help authorities track and investigate these scams.
Make sure to keep detailed records of all communications including taking screenshots related to the fraud, payments, and any reference numbers provided by the bank or Action Fraud, as these records can be useful if further follow-up or if evidence is required. Remember, swift action can increase your chances of recovering funds and can help protect others by contributing to broader anti-fraud efforts.
We hope you have found this blog useful and please do share with your contacts if you think it might help someone you know. If you’re a client of LWA and think you might have received an APP scam email or text from HMRC, you are welcome to check it with us first – contact our Manchester office on 0161 905 1801 or our Warrington office on 01925 830 830 or email us at mail@lwaltd.com.