The government is to legislate for mandatory reimbursement for victims of authorised push payment (APP) scams after hundreds of millions of pounds were stolen in first half of this year.
Through an industry consultation, the UK payments systems regulator (PSR) is investigating how to reduce losses to the technique, which is increasingly used by criminals.
It is calling on banks and tech firms to be more transparent about APP fraud levels, increase prevention and make reimbursement to victims mandatory.
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.
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.
“The PSR expects to see more action from financial institutions to stop these scams from happening and to better protect people if they do fall victim,” said the regulator.
It said action must be taken to prevent…