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Bank transfer scams continue to grip the UK, as the pressure piles on for the government and regulators to do more to solve the issue.
Which?’s analysis of UK Finance figures has revealed that between July 2019 and the end of June 2021, a total of £854m was lost across 306,573 cases of authorised push payments (APP) fraud.
Meanwhile, only 42 percent of losses were returned to the customer.
As a result, £495m has not been reimbursed, and customers have been left to shoulder net losses at a rate of £4.7m a week, £676,881 a day or £28,203 an hour.
This means that victims have lost more to APP fraud every hour than the average UK employee earns in a year, the consumer organisation said.
“Despite huge sums being lost to bank transfer scams on an hourly basis, low reimbursement rates based on inconsistent and unfair decisions by banks demonstrate how the voluntary code isn’t providing the safeguards promised to victims,” said Rocio Concha, policy and advocacy director at Which?, in a statement on the matter.
Commenting on the findings, Ed Adshead-Grant, payments director at Bottomline Technologies, told VIXIO: “The APP fraud levels are unsustainable and undermine the trust behind our UK payment systems.”
“The hardening of the reimbursement and liability models are welcomed for victims, but the reality is that these tweaks all address the problem after the fraud,” he complained, arguing that the payments industry needs to get on the front foot and drive prevention of fraud.
Concha also touched on this, stating that although commitments to make reimbursement mandatory were a huge win for consumers, it is vital that the government introduces the right legislation that will ensure victims get fair and consistent treatment.
“The regulator must also ensure it is ready to introduce and enforce mandatory reimbursement rules the moment that this legislation is passed,” she said.
Responding to Which?’s findings, the Payment Systems Regulator (PSR) told VIXIO that APP scams continue to have a devastating impact on people. “More action must be taken by the financial sector, and by those across the digital ecosystem, including social media firms, to prevent scams and to protect the victims of crime,” the PSR’s spokesperson said.
“We’ve been consulting on a number of measures to enhance protections and further the implementation of preventative measures and we welcome the government’s commitment to legislate to remove regulatory barriers which currently prevent us from making reimbursement of victims mandatory,” the spokesperson continued, noting that the proposals outlined in its consultation mean that it will be ready to implement any regulatory requirements as soon as legislative changes are made.
A voluntary reimbursement code on APP fraud was introduced in May 2019, and most major banks have signed up.
However, Which? has called on the government to urgently act on its commitment to legislate for mandatory reimbursement of victims.
The consumer interest group is not the only one complaining either.
In February, a bipartisan group of UK parliamentarians called on the government to extend the powers of the Payment Systems Regulator and act faster on fraudsters and scammers.
The report unanimously recommended that “the government urgently legislates to give the Payment Systems Regulator (PSR) powers to make reimbursement mandatory, and that the PSR then take rapid action to protect consumers”.
The lawmakers also pressed for the PSR and Treasury to accelerate their consultation processes to enable quicker implementation of measures to protect consumers from fraud.
According to the MPs, the pace of change has been very slow against a background of growing fraud, which should have prompted greater urgency.
For example, the consumer group had filed a super-complaint in 2016, and the previous Treasury Committee called for the Contingent Reimbursement Model (CRM) Code to be made mandatory in 2019.
“Six years on from the original Which? complaint, it is now time for the regulator to step up and mandate the use of simple technology checks like Confirmation of Payee across all payment organisations,” said Adshead-Grant. “Anything less is failing consumers and businesses.”
