APP fraud reimbursement ‘still largely depends on who victims bank with’

Reimbursement for people who have been tricked into transferring money to fraudsters still largely depends on who they bank with, according to a regulator.

The Payment Systems Regulator (PSR) published figures tracking the performance of payment firms in tackling authorised push payment (APP) scams and reimbursing victims in 2023.

Many banks are currently signed up to a voluntary reimbursement code, but in October mandatory reimbursement rules will come into force.

In 2023 victims reported 252,626 cases of APP scams totalling nearly £341 million, the PSR said.

Under the existing voluntary reimbursement framework, 67% of money lost to APP scams was reimbursed, marking an increase compared with 2022, when 61% of money was refunded. Members of the voluntary code reimbursed 68% of the fraud value back to consumers in 2023.

Our new mandatory reimbursement measures will dramatically increase protection for consumers

There is still an inconsistent approach by firms when it comes to reimbursing victims, the regulator said. It said some automatically reimburse in full, others may only make a partial refund, while some only accept claims in very narrow circumstances.

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.

“Our new mandatory reimbursement measures will dramatically increase protection for consumers. These come into effect on October 7 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.”

Looking at individual banks and building societies, the PSR said Nationwide fully reimbursed 96% of the APP scam cases reported to it, while TSB fully reimbursed 95% and Barclays fully reimbursed in 82%.

Only 3% of cases reported to AIB were fully reimbursed, the PSR said, while Danske Bank fully reimbursed 7%, and Monzo fully reimbursed 9%.

In terms of the value of losses, TSB reimbursed 88% of APP scam losses to customers in 2023. Nationwide reimbursed 87% and HSBC (including the First Direct brand) reimbursed 76%.

Meanwhile, AIB Group reimbursed 9% of APP scam losses, Danske Bank reimbursed 13% and Monzo reimbursed 17%, the regulator said.

The PSR also looked at how much money customers at the 14 biggest banking groups lost to APP scams for every million pounds they sent.

For every £1 million both Metro Bank and TSB customers sent in 2023, £266 of that was lost to APP scams.

For Lloyds, Bank of Scotland and Halifax customers, £228 per £1 million was lost to APP scams, and for Nationwide customers £219 per £1 million was lost to APP scams.

Meanwhile, for every one million transactions made in 2023 by Metro Bank customers, 137 were reported as APP scams. For Monzo customers, 131 transactions in every million were reported as APP scams.

For Nationwide, for every one million transactions made, 129 were reported as APP scams.

By contrast, for every one million transactions made by Co-operative Bank customers, just 51 were reported as APP scams.

The PSR also looked at accounts receiving fraudulent payments:

For every £1 million received into TSB accounts in 2023, £408 of it was from APP scams.

For Metro Bank, for every £1 million received, £319 of it was from APP scams.

For every £1 million received at a Starling Bank account, £237 was from an APP scam.

By contrast, for every £1 million received by Santander accounts, £41 was from APP scams.

Looking at the volume of payments, for every one million transactions received into Metro Bank in 2023, 122 were APP scam payments.

At Starling Bank the figure was 114 for every one million transactions.

By comparison, 33 in every one million payments at Santander and 35 in every one million at Barclays were subject to APP scams.

The PSR also said it had found signs that banks’ efforts to detect and prevent fraud are having a positive impact.

Later in 2024, it plans to publish this data to raise awareness about the different ways fraudsters can target victims, such as through social media platforms.

Our data shows that over 90% APP fraud starts online or over the phone, through social media, fake messages and calls

Ben Donaldson, managing director of economic crime at banking and finance industry body UK Finance, said: “The financial services sector invests more in countering fraud than anyone else and is the only sector that reimburses victims. Today’s data from the PSR shows reimbursement increased and the majority of authorised push payment fraud is reimbursed.

“Reimbursement is important in the fight against fraud, but it does not solve the problem on its own – victims still suffer the same psychological impact and criminals still get the stolen money, which causes further harm to society.

“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. 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.”

Rocio Concha, Which? director of policy and advocacy, said: “While there have been some improvements, fraud victims are still facing a reimbursement lottery.”

She said the figures show that mandatory reimbursement rules “cannot come soon enough”.

Fraud victims are still facing a reimbursement lottery

Stop Scams UK chief executive Mark Tierney said the total lost to scams “is a sharp reminder that the scale of the problem remains unacceptable”.

He added: “We firmly believe that the only way to defeat these criminals is by encouraging further collaborative efforts across the banking, technology and telco sectors in tandem with the public sector and Government. It’s only by working together that we can help protect consumers and prevent them from them from unwittingly coming into contact with a scam.”

Here are the total APP scams losses that were reimbursed to consumers by the 14 largest banking groups in 2023. For example, TSB refunded 88% of the total value of money its customers lost to APP scams in 2023. Figures in brackets show the equivalent figures for 2022:

1. TSB, 88% (91%)

2. Nationwide Building Society, 87% (78%)

3. HSBC and First Direct, 76% (73%)

4. NatWest, RBS and Ulster Bank, 76% (62%)

5. Santander, 73% (63%)

6. Barclays, 72% (70%)

7. Clydesdale and Virgin Money, 68% (38%)

8. Lloyds, Bank of Scotland, Halifax, 55% (49%)

9. Co-operative Bank, 49% (54%)

10. Starling Bank, 48% (37%)

11. Metro Bank, 46% (42%)

12. Monzo, 17% (22%)

13. Danske Bank, 13% (20%)

14. AIB, 9% (10%)