According to a recent report, payment service providers in the United Kingdom are expected to refrain from challenging claims made by victims of authorized push payment (APP) fraud under the upcoming reimbursement requirement. The new regulation, set to take effect in 2024, imposes high costs and resource demands on providers when investigating and contesting fraud cases before the Financial Ombudsman Service (FOS).
Kathryn Westmore, a senior research fellow for financial crime at the Royal United Services Institute, believes that payment providers will not dispute claims, particularly for smaller amounts of money, due to the considerable expenses associated with pursuing cases through the FOS.
The Payment Systems Regulator (PSR) recently unveiled the new reimbursement requirement, which will be implemented in October 2024. It mandates banks and payment firms to reimburse victims of APP fraud up to £415,000 per incident. However, payment providers have the option to challenge victim claims if they can prove that the consumer failed to exercise appropriate caution during the payment process. The PSR recognizes that establishing consumer gross negligence as a defense poses a significant burden of proof.
The goal of the PSR is to strike a balance between encouraging consumer vigilance and providing robust protection for those who fall victim to APP fraud. In the lead-up to the implementation of the reimbursement requirement, the regulator will closely monitor instances of APP scams.
With a reported £1.2 billion stolen by fraudsters in the UK in 2022, APP fraud remains a significant concern. The banking and finance sector managed to prevent an additional £1.5 billion in unauthorized fraud. Losses specifically related to APP fraud reached £485.2 million in 2022, as reported by UK Finance.
The UK’s new reimbursement requirement, established by the PSR, aims to greatly enhance consumer protection and position the country as a global leader in APP fraud safeguarding. Chris Hemsley, Managing Director at the PSR, believes that this approach will incentivize payment providers to prevent APP fraud and ensure consistent protection for victims.
FAQ
What is authorized push payment (APP) fraud?
APP fraud refers to cases where individuals are deceived into authorizing a payment to an account they believe is trustworthy but is actually controlled by fraudsters. Unaware of the fraudulent nature, the victim willingly transfers funds.
Who is responsible for reimbursing victims of APP fraud in the UK?
Under the new reimbursement requirement established by the Payment Systems Regulator (PSR) in the UK, both banks and payment firms are obligated to reimburse victims of APP fraud up to £415,000 per incident.
Sources:
– Financial Times: [URL]
– Royal United Services Institute: [URL]
– UK Finance: [URL]
The source of the article is from the blog agogs.sk