/payments

News and resources on payments systems, innovations and initiatives worldwide.

Payments Association warns UK govt on APP fraud plans

The Payments Association has written to the UK government warning of the “unintended consequences” of new policies designed to reduce Authorised Push Payments (APP) fraud.

  15 1 comment

Payments Association warns UK govt on APP fraud plans

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

APP fraud has quickly become one of the most significant types of fraud in the UK, with losses totalling nearly £500 million in the last year. This has prompted a clamour among consumer groups and politicians for banks to tackle the epidemic and to speed up the process of reimbursement for blameless victims.

Earlier this month, the Payment Systems Regulator unveiled new rules, set to come into force in 2024.

While welcoming some aspects of the new plan, the Payments Association, which represents more than 300 firms, says that two policies have potential unintended consequences, and one important issue has been omitted altogether.

First, says the group, the move to ensure that all consumers experiencing APP fraud will get their money back, unless they are “grossly negligent”, may increase fraud because people will pretend to be “vulnerable” and thus becoming automatically entitled to reimbursement even when they have been acting intentionally.

The decision to split the cost of compensation 50/50 between the sending bank/issuer and the receiving bank/issuer will likely make firms more cautious about opening marginal accounts, hurting the low income and vulnerable people.

Finally, the association argues that not involving social media companies means that APP fraud will not be stopped at its source 

Sponsored New Event Report – Natural Capital Finance

Comments: (1)

A Finextra member 

It doesn't help that the regulator won't define 'gross negligence' which means different things to different people.

Not only can account holders take advantage of this, but vulnerable people may not realise they are protected.

[Webinar] Reaping the benefits of Hyper-Personalisation with AI and Application ModernisationFinextra Promoted[On-Demand Webinar] Reaping the benefits of Hyper-Personalisation with AI and Application Modernisation