British regulator considers compensation scheme for victims of bank transfer fraud

The initiative came as a result of 20,000 victims losing GBP 100 million in six months in bank transfers fraud and concerns that banks are able to minimize responsibility for money lost to bank transfer fraud, sometimes known as “push payment” scams. Furthermore, more than GBP 100 million was lost to these types of scam in the first half of 2017, with only GBP 25 million being recovered by banks and other companies on behalf of their customers.

Unlike fraudulent transactions on credit or debit cards, where banks are generally liable for losses, with transfers made to criminals’ accounts banks have no technical liability. UK Finance has revealed that push payments scams is now the second biggest type of payment fraud, after card fraud, in both number and total value involved, according to Telegraph.

The regulator is considering a “reimbursement model” which if introduced would apply from September 2018. However, it pulled back from calling for the programme to be made mandatory, the online publication continues.
Moreover, the PSR also said the victim should only be eligible for reimbursement when they meet the “requisite level of care” or could not have “reasonably” prevented the scam. They could also be refunded if the fraudsters bank has not met the “required standards”.

A consultation proposing how this would run in practice, including who (if anyone) should make the reimbursement, closes on 12 January 2018. The paper also sets out how agencies and providers should prevent and respond to scams.