More victims of authorised push payment (APP) fraud in the UK were reimbursed in 2023 than in 2022, although there is an “inconsistent approach” to reimbursement by firms, according to the Payment Systems Regulator (PSR).
In 2023, there were 252,626 cases of APP scams reported by victims, totalling almost £341 million, and while the volume of sending APP scams rose by 12% from 2022, the total value of APP scams fell 12% to £340.65 million in 2023.
In its second annual APP scams performance report, the PSR revealed that 67% of the money lost to those scams was reimbursed, up from 61% in 2022.
TSB reimbursed 88% of APP scam losses to its customers last year, while Nationwide reimbursed 87% and HSBC compensated 76%.
At the other end, AIB refunded 9% of losses to APP scams, and Danske Bank and Monzo reimbursed 13% and 17% respectively.
When measured by volume of cases, Nationwide came out on top, having fully reimbursed 97% of the APP scam cases reported to it in 2023, followed by TSB which provided full compensation in 95% of cases, and Barclays which did so in 82% of cases.
The PSR found that only 3% of cases reported to AIB were fully reimbursed, while Danske Bank fully reimbursed 7%, and Monzo fully refunded 9%.
The report also showed how much money customers at the 14 largest banking groups lost to APP scams for every million pounds they sent and how many APP scam payments there were per million transactions sent.
For every £1 million both Metro Bank and TSB customers sent in 2023, £266 of that was lost to APP scams. For customers of Lloyds, Bank of Scotland and Halifax, they lost £228 per £1 million to APP scams, and for Nationwide customers, £219 per £1 million was lost to APP scams.
For every one million transactions made in 2023 by Metro customers, 137 were reported as APP scams, while customers of Monzo reported slightly fewer APP scams, at 131 transactions in every million.
Customers of Nationwide reported 129 APP scams for every one million transactions made.
By contrast, for every one million transactions made by The Co-operative Bank customers, 51 were reported as APP scams.
PSR managing director David Geale
David Geale, managing director of the PSR, said: “We can see some positive changes, with more victims being reimbursed than in 2022. But there is still more to do – particularly for some smaller firms which have much higher rates of receiving fraud than larger firms.”
Mandatory reimbursement measures
The PSR’s incoming mandatory APP fraud reimbursement scheme will split the cost of reimbursement 50:50 between sending and receiving firms, marking the first time incentives have been put in at the receiving end.
Under the scheme, the maximum level of reimbursement per claim will be set at £415,000.
“Our new mandatory reimbursement measures will dramatically increase protection for consumers,” added Geale.
“These come into effect on 7 October 2024, and we are already seeing payment firms innovating and improving their controls, which is key to preventing scams from happening in the first place.”
Ben Donaldson, managing director of economic crime at UK Finance said, while the data from the PSR showed reimbursement had increased and that the majority of APP fraud is reimbursed, it “does not solve the problem on its own”.
“Our focus has to be protecting consumers in the first place and that means looking at where fraud originates. Our data shows that over 90% of APP fraud starts online or over the phone, through social media, fake messages and calls,” Donaldson said.
“Despite this, the technology and telecommunications sectors bear no responsibility for reimbursing victims. That needs to change and these sectors also need to tackle the criminal activity that proliferates on their platforms, sites and networks.”
Emma Lovell, chief executive officer of the Lending Standards Board, which oversees the Contingent Reimbursement Model (CRM) Code in the UK, said: “As the PSR notes, the firms signed up to the Code have driven an improvement in reimbursement rates, and data from both the PSR and UK Finance shows signatory firms perform better than non-signatory firms on reimbursement.
“Crucially, the Code covers prevention and detection requirements, as well as reimbursement. The performance of the Code signatories demonstrates that a consistent, independently overseen approach to APP fraud detection and prevention can make a significant difference to preventing customer harm.”
The PSR’s managing director David Geale and Anna Roughley, head of insight at the Lending Standards Board are speaking at Open Banking Expo UK & Europe 2024 – find out more about the agenda and speaker line-up here.
