A new report from the Payment Systems Regulator (PSR) highlights how fraudsters are exploiting major platforms to scam consumers.
APP (Authorized Push Payment) scams occur when victims are manipulated into transferring money to fraudsters impersonating legitimate payees. The PSR’s data indicates that in 2023, these scams cost UK consumers £341 million. A concerning 41% of victims reported a decline in trust towards social media companies, compared to just a quarter of that number who lost trust in traditional banks.
New reimbursement rules for victims are designed to motivate banks to act proactively against fraud, but the PSR emphasizes that social media, telecoms, online marketplaces, and other platforms must also recognize how fraudsters target victims and take preventive actions.
To address this issue, the PSR is urging technology, telecom, and social media platforms to collaborate with payment firms to eliminate the vulnerabilities that fraudsters are exploiting.
Kate Fitzgerald, head of policy at the PSR, stated, “Our report underscores the ways in which major platforms are being manipulated by fraudsters to mislead victims, often leading to severe consequences. By releasing this data, we aim to promote meaningful change across industries and tackle the root causes of APP scams. Preventing these scams before they occur is the most effective way to safeguard consumers and reduce harm.”
NatWest has recently observed that the reimbursement rules for APP fraud are altering the tactics used by scammers. Nick Perkins, NatWest’s director of fraud prevention, noted, “We can see a shift from high-value scams to mass targets, and we are witnessing a significant move toward card fraud. Each time we close one gap, new ones emerge.”
Claire Simpson, senior manager of policy at the PSR, remarked that the new policy has inadvertently led to an increase in fraud in other payment areas. “It was an intended consequence that committing fraud via APP would become more challenging compared to faster payments and apps. We are keen to monitor if there is a significant shift, and we are beginning to see that happen,” she said.
The PSR believes that enhanced data sharing and collaboration across industries is crucial for stopping scams earlier in their lifecycle. Perkins concurs, emphasizing that while APP regulation represents a “progressive step” in combating fraud, it is merely the beginning of a much longer journey.