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Fighting Authorized Push Payment Fraud: A New Reimbursement Requirement
This represents a major breakthrough for U.K. Scam Victims
Fraud is the largest contributor to crime in the UK, and authorized push payment (APP) scams continue to have a devastating impact on people who fall victim, with only 46% of reported cases being reimbursed.
The Payment Systems Regulator (PSR) has today published its policy statement on the new “world first” reimbursement requirement (https://www.psr.org.uk/publications/policy-statements/ps23-3-fighting-authorised-push-payment-fraud-a-new-reimbursement-requirement).
Key Points:
- Require payment firms to reimburse all in-scope customers who fall victim to APP fraud in most cases
- Share the cost of reimbursing victims 50:50 between sending and receiving payment firms
- Provide additional protections for vulnerable customers
- Process to begin by end of 2023
The introduction of mandatory reimbursement for APP fraud (money transfer fraud) within the Faster Payments system aims to:
- Incentivize the payment industry to invest in fraud prevention by making every payment firm meet the cost of reimbursing; and
- Increase customer protection so that most victims of APP fraud are swiftly reimbursed
The new reimbursement requirement will apply to all Payment Service Providers (PSPs), with the cost of reimbursement to be shared 50:50 between sending and receiving payment firms.
Sending PSPs must reimburse customers within 5 business days. There will be a maximum level of reimbursement for APP fraud claims under the new reimbursement requirement; the PSR will consult on the appropriate maximum value and this will be published in PSR guidance in Q4 2023.
There is no minimum threshold. Customers will have 13 months from final payment to the fraudster in which to make a claim.
There are two exceptions to reimbursement under the new requirement:
- Where the customer has acted fraudulently (“first-party fraud”)
- Where the customer has acted with gross negligence
The PSR states that: “gross negligence is a high bar and, where suspected, the burden of proof is on the PSP”. The PSR interprets “gross negligence” to be a higher standard than the standard of negligence under common law i.e. the customer needs to have shown a very significant degree of carelessness.
The decision to retain the “gross negligence” exception (as per the CRM Code) was made to guard against the risk that if customers are more confident of being reimbursed, they will take less care in ensuring that their payee is not a fraudster.
Sending PSPs will have the option to apply a claim excess (the appropriate level for such excess will be consulted on in due course). However, the “gross negligence” exception and claim excess must not be applied to vulnerable customers. As part of assessing an APP fraud case, the sending PSP should assess the customer’s situation and any potential vulnerability in line with the FCA’s guidance (FCA, FG21/1 Guidance for firms on the fair treatment of vulnerable customers (February 2021).
The new reimbursement requirement will come into force in 2024. However, the PSR expects PSPs to start work now to implement the new reimbursement requirement. Tenet welcomes the new reimbursement requirement as we continue to see the devastating impact of APP fraud on both individuals and businesses alike.
Portions courtesy of TENET
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A Note About Labeling!
We often use the term ‘scam victim’ in our articles, but this is a convenience to help those searching for information in search engines like Google. It is just a convenience and has no deeper meaning. If you have come through such an experience, YOU are a Survivor! It was not your fault. You are not alone! Axios!
A Question of Trust
At the SCARS Institute, we invite you to do your own research on the topics we speak about and publish, Our team investigates the subject being discussed, especially when it comes to understanding the scam victims-survivors experience. You can do Google searches but in many cases, you will have to wade through scientific papers and studies. However, remember that biases and perspectives matter and influence the outcome. Regardless, we encourage you to explore these topics as thoroughly as you can for your own awareness.
Statement About Victim Blaming
Some of our articles discuss various aspects of victims. This is both about better understanding victims (the science of victimology) and their behaviors and psychology. This helps us to educate victims/survivors about why these crimes happened and to not blame themselves, better develop recovery programs, and to help victims avoid scams in the future. At times this may sound like blaming the victim, but it does not blame scam victims, we are simply explaining the hows and whys of the experience victims have.
These articles, about the Psychology of Scams or Victim Psychology – meaning that all humans have psychological or cognitive characteristics in common that can either be exploited or work against us – help us all to understand the unique challenges victims face before, during, and after scams, fraud, or cybercrimes. These sometimes talk about some of the vulnerabilities the scammers exploit. Victims rarely have control of them or are even aware of them, until something like a scam happens and then they can learn how their mind works and how to overcome these mechanisms.
Articles like these help victims and others understand these processes and how to help prevent them from being exploited again or to help them recover more easily by understanding their post-scam behaviors. Learn more about the Psychology of Scams at www.ScamPsychology.org
Psychology Disclaimer:
All articles about psychology and the human brain on this website are for information & education only
The information provided in this article is intended for educational and self-help purposes only and should not be construed as a substitute for professional therapy or counseling.
While any self-help techniques outlined herein may be beneficial for scam victims seeking to recover from their experience and move towards recovery, it is important to consult with a qualified mental health professional before initiating any course of action. Each individual’s experience and needs are unique, and what works for one person may not be suitable for another.
Additionally, any approach may not be appropriate for individuals with certain pre-existing mental health conditions or trauma histories. It is advisable to seek guidance from a licensed therapist or counselor who can provide personalized support, guidance, and treatment tailored to your specific needs.
If you are experiencing significant distress or emotional difficulties related to a scam or other traumatic event, please consult your doctor or mental health provider for appropriate care and support.
Also read our SCARS Institute Statement about Professional Care for Scam Victims – click here to go to our ScamsNOW.com website.
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