The UK's Payment Systems regulator has set up a steering group composed of representatives from banks and consumer groups to develop an industry code for reimbursing victims of authorised push payment (APP) scams.
APP fraud - when businesses or individuals are conned into sending money to a fraudulent account to pay for goods or services - was brought to the fore by consumer group Which? in a super-complaint to the regulator expressing concern that consumers had no legal right to claim money back from their banks in such circumstances.
Which?'s position was reinforced by a review of the way banks handle APP scams conducted by the Financial Conduct Authority that found banks’ procedures were inconsistent, their existing fraud detection systems could not easily detect APP scams, and they didn’t collect enough data.
While the PSR initially sided with the banks, merely calling on the industry to do more to protect consumers, the watchdog backtracked in November to propose a contingent reimbursement model that would shift some of the onus of liability to the banks.
The PSR has appointed Payment Strategy Forum chief Ruth Evans as chair of the new steering group, which is expected to publish a first draft of its work in August, with the full and final code being implemented in 2019.
"We want to make it harder for criminals to perpetrate these scams but, if they are successful, improve the experience for victims and improve the chances of returning money to them," says the PSR. "We believe a contingent reimbursement model (CRM) is an effective way to do this."