The UK’s Lending Standards Board (LSB) is taking a firmer stance on authorised push payment (APP) fraud, pushing banks that process scam payments to implement additional measures to halt these transactions.
Receiving banks have faced increased scrutiny regarding their role in preventing APP scams, where victims are duped into transferring money to accounts controlled by fraudsters. APP fraud has surpassed card crime in the UK and has been labeled an “epidemic” by both politicians and consumers, prompting calls for banks to enhance their efforts in combating this issue.
Recent updates to the Contingent Reimbursement Model Code (CRM Code) will require financial institutions to intensify their efforts in identifying both new and existing accounts that may be exploited by criminals. By December 2023 at the latest, banks must actively monitor incoming payments to help pinpoint suspicious transactions and accounts potentially linked to scammers.
Emma Lovell, chief executive of the LSB, stated, “Strengthening the Code’s provisions means putting in place another tripwire for fraudsters looking to steal people’s savings – not to mention the money needed for essential living costs.”
Introduced in 2019, the CRM Code mandates that banks reimburse customers who lose funds without any fault of their own. The Payments Systems Regulator (PSR) is currently consulting on a proposal for mandatory reimbursement for scam victims involving amounts exceeding £100.
Lovell remarked, “Reimbursement can mitigate the financial damage for victims, but it is still a lose-lose scenario. Victims suffer from the lingering effects and trauma of being scammed, while society loses as organized criminals profit from their thefts.
“Scammers aren’t slowing down, and thus we cannot afford to relax our vigilance. The only way to genuinely protect customers is to prevent scams. Maintaining an industry code focused on detecting and stopping scams equips firms with the necessary tools to safeguard against these threats and showcases their commitment to positive customer outcomes and protections.”