UK regulator considers liability shift for push payment scams

The UK's PSR is consulting on potential changes to liability rules that could see victims of push payment scams reimbursed by banks.

Keeping up with the ever-evolving tactics used by fraudsters is a constant challenge for all banks, and ensuring customers are safe from the latest threats is a never-ending task.

One issue that’s becoming increasingly prevalent is that of authorized push payment (APP) scams. These occur when a consumer is tricked into sending money to a fraudster for what they believe is a legitimate payment.

As more people have become comfortable sending large money transfers through online banking solutions, this has become a growing problem, with figures from UK Finance noting that, in the UK alone, there were 19,000 recorded victims of this crime in the first half of 2017, involving over £100 million.

At the moment, there is often little recourse for consumers who fall victim to this type of scam, as they have no legal right to claim back any losses from their bank. However, this may change in the near future, at least for users in the UK, as the country’s Payment Systems Regulator (PSR) has indicated it will consider shifting liability for these scams from consumers to the banks.

The regulator has recently announced it is consulting on how best to introduce a “contingent reimbursement model” that will specify in what circumstances victim of APP fraud can expect to get their money back.

The proposed measures will consider whether the bank or payment organization has met necessary standards to protect its users, as well as if victims have taken appropriate levels of care.

Hannah Nixon, managing director of the PSR, said: “To be successful, the model must be pragmatic: consumers will need to be vigilant and protect themselves, but equally we expect banks and payment service providers to uphold best practice – and when they don’t there should be reimbursement.”

Several banks in the UK have recently announced measures to better protect consumers from APP scams, such as Lloyds Banking Group, which will ask additional security questions when users are setting up new online payments.

Written by Jack Dougal

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