The U.K. Payments Systems Regulator (PSR) has announced a new mandate for how payment service providers reimburse customers who have been the victim of authorized push payment (APP) fraud. This guide summarizes the proposal, outlining what it means for banks and consumers and how this will impact the future of fraud management.
What does the APP Scam Mandate mean for banks?
In addition to monitoring outgoing transactions, banks will have to monitor all customer transactions or face high reimbursement costs for APP fraud victims. The PSR has proposed reimbursement for victims of APP fraud within the Faster Payments system, which will see repayment split 50:50 between sending and receiving banks.
These rules, which are a world first, seek to combat the growing hard of APP fraud, which lost the U.K. 2,300 every minute in 2022. Banks will have an increased need for technologies and processes capable of looking for anomalies in customer payment patterns. Additionally, Banks have until 2024 to redefine their fraud strategies in line with the proposed rules.
What does it mean for consumers and victims of APP Fraud?
In the longer term, the mandate will consistently raise standards, increase safety and security for customers and help maintain the U.K.’s position as a global leader in payments. Short-term benefits include:
Victims of APP fraud will be exposed to less financial harm
Banks strengthening their fraud prevention policies
Customers continuing to take precautions around offers that seem too good to be true
Where do we go from here?
U.K. banks will have to immediately begin updating their technological systems in order to avoid large losses once these rules come into force. While the focus of today’s proposal is banks, there are many industry players whose products are being utilized by bad actors developing and perpetrating these scams, from telephone companies to social media platforms.
We may witness a rise in false APP fraud claims and first-party fabrication of invoices, given the near guarantee of repayment. Further details, including the specific start date and draft legal instruments available to the PSR, will be decided via consultation later this year.
Contact us today to learn more about how ACI Worldwide’s solutions help protect and prevent banks and consumers from APP fraud.
Customers
