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A parliamentary Treasury Committee report has called on the government to make it mandatory for banks to reimburse customers that lose money to authorised push payment (APP) fraud.
The cross-party group of MPs also want the government to legislate against fraudulent online adverts and “seriously consider” whether tech companies should repay the victims of scams on their platforms.
APP fraud, also known as bank transfer fraud, sees criminals use fake websites and emails to trick consumers into authorising payments to them as the scammers attempt to avoid the security embedded into the banking system. It is a growing problem, which, according to banking trade body UK Finance, increased by 70% in the first six months of this year, reaching a value of £355m.
The committee report also called for law enforcement to be appropriately resourced to tackle the scale of the problem and consider whether a single agency with a clear responsibility to fight economic crime would be more effective.
Conservative MP and committee chair Mel Stride said: “For too long, pernicious scammers have acted with impunity, ripping off innocent consumers with fraudulent online adverts, impersonation scams and dodgy crypto investments.”
The recent increase in fraud followed the increase in online activity as consumers were locked down during the Covid-19 pandemic.
“Unfortunately, fraud has soared during the pandemic, and as MPs we’ve heard heartbreaking stories of individuals who have fallen victim to these criminals and lost large sums of money,” he said.
Read more about authorised push payment fraud
- All banks must be transparent about the proportion of victims of APP fraud they refund, says consumer rights organisation Which?
- The financial services ombudsman is siding with customers in over 75% of complaints against banks that refuse to repay losses to authorised push payment fraud.
- Criminals tricking people into making payments through channels such as fake emails and websites have stolen more money than payment card fraudsters.
Stride added that the government has made some progress, but called on them to “push harder and act faster on the growing fraud epidemic”.
Banking systems have automated security checks on suspicious activity, making it more difficult for criminals to steal money. Because of this, they are targeting human weaknesses through APP scams using phone calls, emails, text messages, fake websites and social media posts to trick people into handing over their personal data, before conning them into authorising payments.
Through a voluntary reimbursement code, banks are instructed to reimburse victims of APP fraud, which occurs when criminals use fake websites and emails to trick consumers into authorising payments to them.
Figures from consumer rights organisation Which? show the Financial Ombudsman Service is receiving a growing number of complaints from consumers that are not being reimbursed by banks. In 2020 to 2021, complaints increased from 3,600 to 7,770. Three-quarters of these were supported by the Financial Ombudsman Service, resulting in the customer being reimbursed.
In January last year, Anne Boden, CEO of digital challenger Starling Bank, called for cooperation between different sectors to clamp down on APP fraud.
“Banks invest billions of pounds into tackling economic crime, but we cannot stop it on our own,” she said.