According to a recent report, payment service providers in the United Kingdom are not expected to challenge claims made by victims of authorized push payment (APP) fraud under the new reimbursement requirement set to take effect in 2024. The high costs and resources associated with investigating and challenging fraud cases before the Financial Ombudsman Service (FOS) are highlighted as major factors influencing this decision.
Kathryn Westmore, a senior research fellow for financial crime at the Royal United Services Institute, expressed her belief that payment providers would not contest claims, especially for cases involving smaller sums of money. The potential expenses of pursuing a case through the FOS are deemed unworthy.
The Payment Systems Regulator (PSR) recently announced a new reimbursement requirement, which will come into effect in October 2024. It obligates banks and payment firms to reimburse victims of APP fraud up to £415,000 per incident. However, payment providers can challenge victim claims if it can be demonstrated that the consumer failed to exercise sufficient care when making payments. The PSR has emphasized that the burden of proof for demonstrating gross negligence on the part of the consumer is very high.
The PSR aims to strike a balance between encouraging consumers to exercise caution while ensuring robust protection for those who fall victim to APP fraud. In the lead-up to the implementation of the new reimbursement requirement, the regulator will closely monitor instances of APP scams.
With fraudsters stealing over £1.2 billion in the UK in 2022, the issue of APP fraud remains a significant concern. The banking and finance sector managed to prevent an additional £1.5 billion in unauthorized fraud. Losses related to APP fraud alone amounted to £485.2 million in 2022, according to UK Finance.
The new reimbursement requirement by the UK’s PSR aims to significantly enhance consumer protection and establish the country as a global leader in APP fraud protections. 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 instances where individuals are deceived into authorizing a payment to an account that they believe to be trustworthy, but is actually controlled by fraudsters. The victim willingly transfers funds, unaware of the fraudulent nature of the transaction.
Who is responsible for reimbursing victims of APP fraud in the UK?
Under the new reimbursement requirement set 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 portaldoriograndense.com