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Up to a quarter of APP fraud victims could lose out under new reimbursement rules

Up to a quarter of APP fraud victims could lose out under new reimbursement rules

New APP fraud reimbursement rules implemented by the Payment Systems Regulator could lead to around a quarter of victims being denied refunds warns UK bank TSB.

Set for introduction next year in the face of an epidemic of authorised push payment fraud, the PSR's plans allow banks to adopt a £100 threshold for reimbursing victims.

TSB, which currently refunds 98 percent of fraud cases under its Fraud Refund Guarantee, is urging the regulator to reconsider its plans, pointing out that 20-40-year-olds account for over half (52%) of such cases, while one in six (17%) are over 60.

By monetary value, cases under £100 account for a small amount of overall fraud losses - at one percent. Yet this equates to a projected £5 million stolen from UK households every year on current fraud rates.
TSB is also calling on the regulator to scrap proposals for a £35 excess fee per claim - with concerns the excess would disproportionately impact financially vulnerable people amid a cost-of-living crisis.
The bank says that over one in 10 cases under the £100 threshold are victims of Advanced Fee Fraud - a category which typically targets the most financially vulnerable, often by exploiting a fee from victims trying to access loans that simply do not exist. 
TSB warns that if a £100 threshold is applied, it would exclude a significant number of consumers who have fallen victim on social media sites, where scams remain rife.
For example, Meta-owned platforms (Facebook, Instagram and WhatsApp) account for four fifths (80%) of all purchase fraud at TSB alone. And UK Finance states that over two thirds (70%) of all push-payment fraud starts on online platforms.
Paul Davis, director of fraud prevention at TSB says: “We welcome these moves by government and regulators to increase customer protection from Fraud. However, many people simply cannot afford losing £100 to fraud - especially in the current economic climate - and deserve to be protected from increasingly complex scams that often take place on social media sites."

Comments: (4)

Ingus Linkevics
Ingus Linkevics - Fairmay Ltd - London 09 January, 2023, 12:561 like 1 like

Hmm, sounds like TSB is criticising the PSR

A response to the £48 mil fine imposed to the TSB last month? :) 

I read here that PSRs approach is not so bad after all


A Finextra member
A Finextra member 09 January, 2023, 21:392 likes 2 likes

Dont forget TSB was also fined £104million for breaches of LIBOR and other benchmarks. 

Can their input really be trusted? 

A Finextra member
A Finextra member 10 January, 2023, 09:29Be the first to give this comment the thumbs up 0 likes

The risk here is some account holders may end up using this as a dispute tool rather than fraud as it is intended for.

Not to mention a less cautious approach to payments knowing that a refund is almost guaranteed.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 10 January, 2023, 10:23Be the first to give this comment the thumbs up 0 likes

If only they'd implemented my Three Strike Rule To Eliminate Cybercrime, they could saved a lot of money!

I totally agree with Anon Finextra Member that a near-guaranteed refund regime creates huge moral hazard, not to mention the heightened risk of first party fraud and cases of customers paying supplier invoices, crying APP Fraud and pulling their money back.