Changes to APP Fraud Refunds

We have previously written about Authorised Push Payment Fraud (“APP”) and our success in reclaiming funds for victims. Unfortunately the number of individuals falling victim to these sophisticated scams continues to increase.

The current system for reclaiming funds

In May 2019 a number of UK banks signed up to the Authorised Push Payment Scam Code. If a bank has signed up to the code, they must:

• Educate their customers about APP scams;
• Identify high risk payments and customers who are vulnerable and therefore more at risk of becoming a victim;
• Provide efficient warnings to customers if an APP scam has been identified;
• Stop or delay payments where a scam is suspected; and
• Take steps to prevent fraudsters opening bank accounts.

However the Financial Ombudsman has been critical of the code as although most major banks signed up to the code, not all are participating in it. Banks have also been criticised for not following the spirit of the guidelines by rejecting thousands of legitimate claims.

What is changing?

The most recent UK Finance figures show that in the six months to June 2021 over 106,000 individuals fell victim to an APP fraud. The value of these fraudulent transactions is estimated to be £355.3million, and a total of £150.7million was returned to customers. Although it is good news that a significant sum has been returned to customers, over half of the fraudulent sums taken from customers are not currently being refunded.

The Payments Systems Regulator (“PSR”), who implemented the above code, wants mandatory refunds to customers who have been victims of APP scams. Under Government-backed plans, banks will be forced to refund victims of such scams and repayments will become compulsory.

These changes are intended to help those with legitimate claims that banks previously refused to assist reclaim funds. It is hoped that many more people will be able to recover funds with a higher chance of success.

Banks will, however, still be able to refuse refunds if they believe the customer’s negligent behaviour led to the fraud taking place. For instance, this could be where clear warnings have been ignored by customers.

How can Ellis Jones help?

Our specialist Banking and Finance Litigation team can advise and assist you in submitting an initial complaint to your Bank and any subsequent complaint to the Financial Ombudsman Service if you believe you are a victim of a scam.

If you believe you have been a victim of a scam please do not hesitate to contact our Banking and Finance Litigation team by calling 01202 525333 or by email at banking@ellisjones.co.uk.