New protection for consumers from Authorised Push Payment scams
On the 28 May 2019, the Authorised Push Payment (APP) scams voluntary code of good practice was launched. Let’s look at how this offers you better protection from these types of scams and what an APP scam actually is.
Authorised Push Payments
An Authorised Push Payment (APP) is when you request your bank or other payment service provider to make a payment from your bank account to another.
The way fraudsters are using APPs to trick people into transferring money to their bank account by making you believe that you are paying a legitimate person or company. These types of payments can be made over the phone, online, or in person, and most are completed instantly.
The financial impact of APP fraud
According to statistics released in September 2018 by UK Finance, in the first half of 2018, consumers lost £92.9 million due to authorised push payment scams.
The new code
The Code will provide better protection for consumers by setting out agreed principles that banks and payment service providers (PSP) can sign up to. It will also set out the circumstances in which people should be reimbursed when APP fraud occurs.
Any customer of a bank or PSP signed up to the Code who falls victim to an APP scam will be reimbursed if their bank failed to meet the standards set out, providing the customer did everything expected of them under the Code.
Payment Service Providers that sign up to the Code will be committing 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.
Also, in the cases where both the PSP and the consumer have met their expected level of care, then the consumer will be reimbursed. This is referred to as the ‘no blame scenario’.
Long term reform
The PSPs have committed to working together to introduce a longer-term funding mechanism for January 2020. In the meantime, several PSPs have also committed to funding an initial contribution so that customers in the ‘no blame ‘scenario’ can be reimbursed from implementation on 28 May 2019 until the end of the year.
Which banks have signed up?
As of the 28 May 2019, the following banks and payment service providers had signed up to the new Code:
- Bank of Scotland
- Cater Allen
- First Direct
- HSBC UK
- Intelligent Finance
- Lloyds Bank
- M&S Bank
- Metro Bank
- Starling Bank
- Ulster Bank
How to protect yourself from APP scams
You can get further information on how to protect yourself from this type of fraud on the Take Five to Stop Fraud website set up by UK Finance and the Government. Here are some of the tips you can start using today:
- A genuine bank or organisation will never contact you out of the blue and ask you for details such as your PIN or password.
- Never automatically click on a link in an unexpected email or text.
- Just because someone knows some of your personal details such as your mother’s maiden name, it doesn’t mean that they are genuine.
- Always question uninvited approaches as it could be a scam. Instead, contact the company directly using a known email or phone number.
What to do if you are a victim of an APP scam
Immediately report the incident to your bank. You should also then report the scam to Action Fraud You can report fraud or cybercrime to Action Fraud any time of the day or night using their online reporting tool. Alternatively, you can also call them on 0300 123 2040.
If your bank won’t help, or you haven’t heard back within eight weeks, you can then go to the ombudsman. The ombudsman can help sooner if your bank has sent you a rejection letter suggesting you use the ombudsman.
To start your complaint, fill in a form on the Financial Ombudsman Service website or call 0800 0234 567.
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