Monzo and Starling scored among the lowest for reimbursing victims of authorized push payment (APP) fraud, according to 2022 data released by the Payment Systems Regulator.
These challenger banks, known for their customer service, fell short compared to larger banks in compensating customers deceived by fraudsters into making payments to unauthorized accounts.
Data revealed that TSB excelled in reimbursements, refunding 91% of the total value of APP fraud losses reported in 2022. The bank also led in terms of volume, fully reimbursing 94% of claims and providing partial refunds for 4%.
In contrast, Monzo and Starling reimbursed only 22% and 37% of the value of reported APP scams, respectively. Monzo ranked lowest in volume, fully refunding just 6% of claims and partially reimbursing 2%. Starling performed slightly better, fully refunding 44% of cases and partially returning 6% of lost payments.
Both banks also struggled to reduce scam volumes, ranking first and second for the number of APP fraud payments sent per million transactions. In terms of value, Starling limited losses to £112 per million pounds transacted, while Monzo experienced losses exceeding that figure.
The latest fraud report by UK Finance highlighted that over £152 million was refunded to APP fraud victims by the banking sector in the first half of the year.
In response to the PSR’s new figures, UK Finance criticized social media and telecommunications platforms that enable this type of fraud.
“The PSR data does not indicate where fraud originates,” stated the industry forum. “Our information shows that 94% of authorized fraud starts online or over the phone, through social media and other deceptive communications. However, the technology and telecom sectors have no responsibility to reimburse victims, resulting in minimal commercial incentive for them to address the escalating threat on their platforms. We need collaboration from these sectors to protect consumers by preventing these heinous crimes from occurring in the first place.”