British TSB Bank officials have warned that the fraud refund rules proposed by the Payment Systems Regulator to come into effect in 2023 will exclude a significant part of APP fraud victims. Under the new scheme, banks would be required to reimburse the majority of customers who have fallen victim to APP fraud, which the PSR said ‘is likely to be a significant increase on current reimbursement rates which are around 56%’.

However,  the scheme would also allow banks to exclude victims who lose less than GBP 100, which TSB said accounted for roughly a quarter of all push payment victims. Many banks – including major lenders such as NatWest, HSBC, Lloyds and Barclays have signed up to the 'contingent reimbursement' code, overseen by the Lending Standards Board. The code stipulates banks should reimburse customers who lose money to these scams unless customers ignore warnings or act with gross negligence, however many smaller lenders and private banks are not signed up.

TSB officials reportedly stated that the bank broadly supported the PSR’s plans to introduce new rules but that authorised push payments fraud generated by social media platforms meant younger people were disproportionately affected by the crime. According to data presented by the bank, over half of cases of APP fraud were between 20 and 40 years old, the bank said. Cases under GBP 100 account for just 1% of overall fraud losses in cash terms, TSB said, though this still amounted to GBP 5 million stolen.

The bank has urged the regulator to reconsider the GBP 100 minimum threshold, as well as the GBP 35 excess limit. Authorised Push Payment fraud APP (authorised push payment) fraud happens when someone is tricked into sending money to a fraudster posing as a genuine payee. There are numerous ways a fraudster would be able to pull this off, for example through intercepting emails, posing as a genuine business, sending links to fake websites via email or text messages, and cold calling.

According to the regulator, fraud is the largest contributor to crime in the UK, and APP scams are rising quickly. They are now the largest type of payment fraud, both in the number of scams and the value of losses. In 2021, losses to APP scams totalled GBP 583.

2 million, a 39% increase on the previous year. Many cases go unreported, so the real figures are likely to be higher. Of these reported cases, currently only 46% of total APP scam losses are reimbursed to the victim.

The Payment Systems Regulator APP fraud refund rules In November 2021, the PSR consulted on a package of measures to combat APP scams, including mandating reimbursement for victims. The PSR proposed to allow PSPs to have a minimum threshold for a reimbursement claim (of no more than GBP 100); withhold an ‘excess’ (of no more than GBP 35); and set a time limit for claims (of no less than 13 months). According to the regulator, these options may help PSPs ensure their customers take care in making small payments, minimise claims for civil disputes and maintain proportionate costs, while protecting consumers appropriately.

In October 2022, the PSR announced its intention to speed up the coming into force of requirements for mandatory reimbursement for consumers. In December 2022, the PSR revealed further reporting requirements for APP scams. Banks and building societies will be required to provide data regarding the proportion of victims who are left fully or partially out of pocket, as well as the rates of APP scams happening at both sending and receiving entities.

By publishing this data, clients will have a clearer picture of how well their bank performs when it comes to tackling scams and reimbursing victims.  PSR representatives emphasised the importance of transparency when it relates to the way banks treat people who have fallen victim to APP scams. .