Transfer scam victims may get cash back

● Regulator wants banks and customers to do more to protect against fraud

People who have been tricked into transferring money to a fraudster could find it easier to get their money back under plans set out by a regulator.

The Payment Systems Regulator (PSR) has been looking into such scams following a “super complaint” by con- sumer group Which? over concerns that, unlike many other payment methods, victims conned into making a bank transfer to a fraudster have no legal right to get their money back from their bank.

Plans outlined by the PSR, following work with the payments industry, aim to make it harder for fraudsters to commit such crimes, ensure banks follow best practice and help them to recover money.

A reimbursement scheme has also been proposed, which could help people get their money back under certain circumstances – but the PSR said there is “no silver bullet” and some people will still lose out.

New statistics published by UK Finance show that in the first six months of 2017 alone more than 19,000 victims were a target of such scams – known as authorised push payment (APP) scams – involving a total amount over £100 million.

The PSR said it is seeking feedback on how best to introduce a “contingent reimbursement model” by September 2018. The proposed model would set out the circumstances when victims of such scams would get their money back, and which bank or payment organisations should pay.

Whether or not the fraud victim gets their money back would depend on whether banks and payment organisations had met required standards, including measures and processes to help prevent and respond to scams – as well as whether or not the victim has taken an appropriate level of care in protecting themselves.

The PSR said the compensation model aims to help reinforce compliance with new best practice standards that banks will follow when a victim reports one of these scams.

Hannah Nixon, managing director of the PSR, said the new measures will make a “positive difference” to scam victims and help prevent such frauds happening.

“However, there is no silver bullet for APP scams and some people will still, unfortunately, lose out. That’s why we’ve continued to look for a solution that could reimburse those who are scammed, and today we begin consulting on an option we think could work.

“To be successful, the model must be pragmatic: consumers will need to be vigilant and protect themselves, but equally we expect banks and payment service providers to uphold best practice – and when they don’t there, should be reimbursement.”

The report was welcomed by Which? Chief executive Peter Vicary-smith said: “It’s good to see the regulator coming down on the side of consumers. If this stops the huge amounts of money lost to bank transfer scams, it’ll be a significant win.

“The regulator must now ensure any reimbursement scheme properly compensates victims. Meanwhile, banks must move to quickly put in place better checks and protections to prevent these scams happening in the first place.”