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A consultation by the PSR (Payment Systems Regulator) to PSP(Payment System Provides)/Banks to prevent Authorised Push Payment Scams (APP) at source and to provide better support to the victims is underway.
APP scammers use Faster Payments as their payment channel of choice, 80% of APP fraud. To do so scammers need a bank account.
Contingent Reimbursement Model Code (CRM) agreed by 9 banks, 85% of payments, reported £403 million losses in APP scams in 18 months with customers being reimbursed £175 million (43%). The amount a particular bank customer receives is very dependent on the bank they are with, and this can range anywhere from 5 to 90%.
For the total APP scam figure the non-PSP Banks CRM members need to be added. Estimates are an additional 40% of APP fraud is taking place with the non-member PSP/Banks, who make 15% of the payments. It seems that scammers often attack the least prepared PSP/Banks for greater success.
With Faster Payments offered by the PSP/Banks the sender (customer) is bearing the majority of the loss and also the fault for the APP fraud. The receiving bank account, where the scammers live, the fraudsters appear to be barely troubled as they move the money on and often out of the country.
To further protect customers the following should be considered:
As APP fraud is a growing menace to society, about 5,000 customers a month are scammed, the protection needs to be better coordinated, including more receivers’ bank details and transaction data. A framework of roles and responsibilities, with compliance, is required. Similar to Know Your Customer (KYC) and Antimoney Laundering (AML) as banks as required under the banking license.
The customer, before making the payment, should see a dashboard of information showing the level of risk the PSP/banks predict for that transaction. As this customer is at the most danger of fraud making a payment to a new name, PSP/Banks may want to request a period, e.g., 24 hours to approve that transaction over a certain amount. The customer also needs to know where the liability is likely to fall on which party once the payment is made.
The Payment Service Regulator has the opportunity to make Faster Payments a world class service that protects UK customer against APP scammers. By mandatory compliance, so everyone one knows their roles – the customer, the PSP and the sending and receiving banks – and that a united front is presented against the APP scammers.
Fraud is a forever challenge, and we need to tackle APP Scams at source and protect customers, starting with Faster Payments.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
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