Consumers are to benefit from significantly increased protections against authorised push payment scams (APP) as a new industry voluntary Code – the Contingent Reimbursement Model Code for Authorised Push Payment Scams – developed by the APP Scams Steering Group comes into effect from today (May 28).
APP scams occur when customers are tricked into authorising a payment to an account that they believe belongs to a legitimate payee – but is in fact controlled by a scammer.
APPs are made at the request of the customer and can be carried out over the phone, online, or in person. Consumers lost £228.4m due to APP scams in 2018, according to statistics from UK Finance.
The new voluntary Code sets out increased consumer protection standards which will help reduce the occurrence of APP scams. To help protect customers, payment service providers that have signed up to the Code commit to:
- protect their customers with procedures to detect, prevent and respond to APP scams, providing a greater level of protection for customers considered to be vulnerable to this type of fraud; and
- greater prevention of accounts being used to launder the proceeds of APP scams, including procedures to prevent, detect and respond to the receipt of funds from this type of fraud.
Any customer of a bank or payment service provider (PSP) which is signed up to the Code will be fully reimbursed if they fall victim to an APP scam, provided they did everything expected of them under the Code.
Eight payment service providers – Barclays, HSBC, Lloyds Banking Group, Metro Bank, Nationwide, RBS, Santander and Starling Bank – have committed to implementing the Code from today, with more working towards implementation in the coming months.
Ruth Evans, independent chair of the APP Scams Steering Group, said: “Today marks a watershed in delivering increased protections for consumers from authorised push payment scams. For the first time, any victim who is a customer of a signatory firm will be fully refunded, as long as they meet the standards expected of them.
“For far too long these scams have caused havoc to consumers’ lives. They can have a devastating impact, causing hardship and distress to victims that can lose anything from a few pounds, to the whole of their life’s savings.
“From today, the majority of consumers will be covered by the Code and it is great to see that many more banks and PSPs are working towards joining the scheme. It remains vital that every sector – banks, consumer groups, technology and telecom firms, regulators and government – does all it can to tackle this devastating crime and prevent money getting into the hands of criminals.”
Customers of signatory PSPs who fall victim to an APP scam should address their claim to their PSP. PSPs then have 15 business days to make a decision, apart from in exceptional circumstances.
Customers who have fallen victim to an APP scam before May 28, or those who are customers of non-signatory PSPs, should speak to their provider in the first instance. All customers can also take a complaint to the Financial Ombudsman Service.
The voluntary Code was developed by a Steering Group established by the Payment Systems Regulator. The Steering Group comprises an equal number of representatives from consumer groups and industry brought together to ensure a fair and sustainable solution for all.
From July 1 2019, the ongoing operation and governance of the voluntary Code will be carried out by the Lending Standards Board (LSB).
Dave Pickering, Chief Executive of the Lending Standards Board, said: “The LSB is delighted to be playing a key role in the governance and oversight of the new Code. Authorised push payment scams have a devastating impact on victims and the LSB is committed to ensuring that the Code works effectively and that signatories fulfil their obligations under it.
“The LSB has a strong track record in overseeing industry codes, and, through our work, improving standards within firms, developing industry good practice, with the customer being the ultimate beneficiary.
“We look forward to working with payment service providers, wider industry and consumer groups to make a positive difference to victims of scams and reducing the success rates of these crimes.”