UK Govt Is Alerted By Payments Association To APP Fraud Schemes

In a letter to the UK government, the Payments Association warned about “unintended consequences” of new policies meant to stop Authorized Push Payments (APP) fraud.

With losses of nearly £500 million in the last year, APP fraud has quickly become one of the most important types of scam in the UK. This has made consumer groups and politicians demand that banks do something about the problem and speed up the process of giving money back to people who didn’t do anything wrong.

The Payment Systems Regulator announced new rules earlier this month. They will go into effect in 2024.

Even though the Payments Association, which is made up of more than 300 companies, likes some parts of the new plan, it says that two policies could have unintended consequences and that an important problem has been left out.

First, the group says that the move to make sure that all consumers who experience APP fraud will get their money back, unless they are “grossly negligent,” may make fraud worse because people will pretend to be “vulnerable” to get their money back, even if they did it on purpose.

The choice to split the cost of compensation in half between the sending bank/issuer and the receiving bank/issuer is likely to make firms less likely to open new accounts for people with low incomes or who are vulnerable.

Lastly, the group says that if social media sites aren’t involved, APP theft won’t be stopped where it starts.