The Payment Systems Regulator (PSR) consultation CP21/10 on measures to tackle authorised push payment (APP) scams closed on 14 January 2022, and the regulator has published its response1. The consultation set out steps to improve protection against APP scams, building on proposals from a call for views published in February 20211.
APP scams happen when fraudsters trick people into transferring money to them, for example by posing as a legitimate payee or constructing fraudulent reasons for a payment1. In the first half of 2021, losses due to APP scams totalled £355 million, although the PSR says this is likely to be an underestimate because of under reporting, and the figure overtook card fraud losses for the first time1.
The consultation proposed three measures1:
| Measure | What was proposed |
|---|---|
| Publication of fraud data by banks | Require the major PSPs in the 12 largest banking groups in Great Britain and the 2 largest banks in Northern Ireland outside those banking groups to publish data on their performance on APP scams, and reimbursement levels for victims |
| Improve scam prevention | Task industry to improve intelligence sharing, to improve detection and prevention of APP scams |
| Reimbursing victims | Mandatory reimbursement for victims of scams who have done nothing wrong |
On reimbursement, the PSR said there could currently be challenges with making reimbursement mandatory, and set out two ways of achieving it so that, when the laws are changed, it could act quickly as necessary to bring about the right outcomes1.
"In the first half of 2021, losses due to APP scams totalled £355 million (although this is likely to be an underestimate, due to under reporting of APP scams), overtaking card fraud losses for the first time."
The PSR also said it would consider what further action it could take using its existing powers in the new year, and that it would explore how to facilitate industry coordination and initiatives to address the problem urgently1. An independent report by Lucerna to identify and recommend metrics around the publication of APP scams data by payment service providers was published alongside the consultation1.
Why it matters for households
APP scams involve people being tricked into authorising a payment themselves, rather than a fraudster taking money from an account without their knowledge, which affects how losses are treated. The PSR's figures put losses at £355 million in the first half of 2021, a period when APP scam losses overtook card fraud losses for the first time1. The consultation covered who would have to publish data on APP scam performance and victim reimbursement levels, and proposed that reimbursement should be mandatory for victims who have done nothing wrong1. The PSR has not reported in this document when any mandatory reimbursement requirement would take effect, and it notes that making reimbursement mandatory could face challenges under current rules1.
What happens next
The PSR said it would consider what further action it could take using its existing powers in the new year, and would explore how to facilitate industry coordination and initiatives to address APP scams urgently1. It has not reported a date for those steps in this document.
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