Getting Your Money Back After a Scam: Changes to Reimbursement for Authorised Push Payment Scams
Author: Daniela Dimitrova
Key Contact: Aisha Wardell
The Payment Systems Regulator (PSR) has recently changed the way authorised push payment scams are dealt with.
What is an authorised push payment scam?
An authorised push payment scam occurs where a payer, who can be an individual consumer or a company, is instructed by a fraudster to send money from their account to another account. Authorised push payment also involves the consumer authorising the payment themselves, having been deceived by the fraudster. This is different to the other types of fraud where the fraudster usually hacks into the consumer’s bank account or card details.
According to the UK Finance Annual Fraud report, £459.7 million was lost to authorised push payment scams in 2023, highlighting the major impact such types of fraud can have on the industry and on the lives of individual consumers and companies.
How are authorised push payment scams now dealt with differently?
From 7 October 2024,PSR regulations directed towards prevention and protection of consumers if they become victims of such scams, include:
- New rules in Faster Payments where the maximum reimbursement limit will be £85,000.
- All payment firms will be incentivised to assist in both sending and receiving, firms splitting the costs of reimbursement 50:50.
- Most authorised push payment scams victims will be reimbursed within five business days
- A maximum repayment limit for claims of £415,000.
- A £100 optional excess applied to claims following a scam.
- A time limit of consumers raising their claim within 13 months of the final payment made to the fraudster.
Please note: it is important to emphasise that the new requirements do not apply to overseas payments or any payment using cash, cheque or card.
The excess rule can be largely discretionary. Payment Service Providers (PSP) play a vital role in deciding whether the customer will receive the excess and how much excess they will receive. A PSP is a third-party company that enables businesses and individual consumers to accept electronic payments and act as intermediaries between consumers, merchants, and financial institutions to facilitate secure transactions.
It is common practice for PSPs to impose the full excess or partial excess in an authorised push payment claim. Each PSP can have their own requirements relating to the excess rule. For example, Barclays Bank rules confirm that the excess may be applied to claims above £100. This means that if an authorised push payment claim is under £100 then there will be no opportunity for the victim to receive any money back.
The most important requirement for victims to claim compensation relates to the overall validity of the claim. This will substantially depend on the conduct of the victim during the fraud. For example, victims might not be eligible for reimbursement where they have acted fraudulently themselves or with gross negligence. Compensation is broadly subject to the validity of the claim in question. The victim must show that they have not acted fraudulently themselves and that it was in fact the fraudster was the person who had persuaded them to send the money.
The best approach for victims is to raise their claim as soon as the authorised push payment scam took place. To be entitled to compensation victims must ensure that their claim is raised no later than 13 months of the final payment made to the fraudster.
What do the changes mean?
The new regulation suggests that the PSR wishes to protect victims of authorised push payment scams providing that their claim is valid. The changes are a step towards a more consistent approach across the industry on reimbursing consumers where they have been victims of authorised push payment scams.
If you have been a victim of authorised push payment scam, please contact our Litigation & Dispute Resolution Team.