Bank transfer scam victims could find it easier to get money back under plans


People who have been tricked into transferring money to a fraudster could find it easier to get their money back under plans set out by a regulator.

The Payment Systems Regulator (PSR) has been looking into such scams following a "super complaint" by consumer group Which? over concerns that, unlike many other payment methods, victims conned into transferring money by bank transfer to a fraudster have no legal right to get their money back from their bank.

Plans outlined by the PSR, following work with the payments industry, aim to make it harder for fraudsters to commit such crimes, ensure banks follow best practice and help them to recover money.

A reimbursement scheme has also been proposed, which could help people get their money back under certain circumstances - but the PSR said there is "no silver bullet" and some people will still lose out.

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New statistics published by UK Finance show that in the first six months of 2017 alone more than 19,000 victims were a target of the scams - known as authorised push payment (APP) scams - involving a total amount of over £100 million.

The PSR said it is seeking feedback on how best to introduce a "contingent reimbursement model" by September 2018.

The proposed model would set out the circumstances when victims of such scams would get their money back, and which bank or payment organisations should pay.

Whether or not the fraud victim gets their money back would depend on whether banks and payment organisations had met required standards, including measures and processes that help prevent and respond to scams - as well as whether or not the victim has taken an appropriate level of care in protecting themselves.

The PSR said the compensation model aims to help reinforce compliance with new best practice standards that banks will follow when a victim reports one of these scams.

Hannah Nixon, managing director of the PSR, said the new measures will make a "positive difference" to scam victims and help prevent such frauds happening.

She continued: "However, there is no silver bullet for APP scams and some people will still, unfortunately, lose out. That's why we've continued to look for a solution that could reimburse those who are scammed, and today we begin consulting on an option that we think could work.

"To be successful, the model must be pragmatic: consumers will need to be vigilant and protect themselves, but equally we expect banks and payment service providers to uphold best practice - and when they don't there should be reimbursement."

The report was welcomed by Which?

Chief executive Peter Vicary-Smith said: "A year on from our super complaint, it's good to see the regulator coming down on the side of consumers.

"If this stops the huge amounts of money lost to bank transfer scams, it'll be a significant win.

"To make this a reality, the regulator must now ensure any reimbursement scheme properly compensates victims. Meanwhile, banks must move to quickly put in place better checks and protections to prevent these scams happening in the first place."

The PSR said new protections to help prevent scams happening and help banks recover money faster will include:

:: Confirmation of payee starting in 2018, allowing customers to verify that they are paying the person they intend.
:: Transaction data analytics, starting in 2018, helping banks to shut down mule accounts taken over by criminals for fraudulent activity and spot potential fraudulent payments.
:: "Know your customer" data sharing for banks due in 2020 to help stop fraudsters opening accounts they use for scams.
:: Improved data sharing - providing a better understanding to help banks work together to respond to scams faster.

The Financial Conduct Authority (FCA) said it had previously found that, generally, procedures for handling cases of push payment scams are often unclear and inconsistently applied.

It said it will be actively monitoring the adoption, implementation and impact of the standards.