A quarter of fraud victims may receive no refund despite new rules forcing banks to reimburse money lost in transfer scams, money experts have warned.
New regulations set to take effect on October 7 will make reimbursement for Authorised Push Payment (APP) scams compulsory.
APP scams involve fraudsters tricking people into sending money to accounts they control, such as by selling nonexistent items online or pretending to be from the person’s bank.
However, banks can choose if they make consumers pay the first £100 of any refund claim unless the customer is classed as vulnerable. And according to new research, many could be planning to implement this charge.
Personal finance site Finder contacted 21 major UK banks in July and only Allied Irish Bank (AIB) confirmed that it won’t do so.
According to Finder, Virgin Money said it would “consider APP fraud claims on an individual basis, with the outcomes dependent on the specifics of each case”.
The rest stated they were still considering the rules or refused to answer, despite the new refund requirements being confirmed last December and the scheme starting in less than three months.
A spokesperson for the watchdog bringing in the rules, the Payment Systems Regulator (PSR), told Finder: “We would have expected the payment service providers [which include banks] to have done a lot more by now in terms of educating people about the new rules and how they will be approaching them, including the £100 excess. There’s a lot more they can be doing.”
The new rules come following a worryingly rapid year-on-year increase in APP fraud cases.
In 2023, victims of APP fraud lost £459.7million. The number of cases of APP fraud rose 12 percent to 232,429.
However, since one in four APP fraud losses is below £100, these customers would not see any reimbursement if banks chose not to cover all of the amount.
Liz Edwards, money expert at Finder, said: “Based on 2023 figures, more than 58,000 cases would have resulted in no refund if all companies had applied the excess. £100 is a lot of money to many people, and banks need to be clear with customers where they stand.
“Figures from the industry also suggest that young people could be disproportionately affected if banks apply this excess.
“Banks do give fraud prevention advice but fraudsters are continually evolving, and deepfakes are a particularly worrying development.”
Ms Edwards added: “If you get a call or message on an unknown number from someone claiming to be from an organisation you know, urging you to move money, be wary and call back on the official number.
“The same goes for messages from people who claim to be friends or family – call back on the number you know, to check. And if you think you’ve been scammed, tell your bank immediately.”
