Banks to be forced to refund some scam victims from next week

From 7 October 2024, banks and other payment service providers, must reimburse those who have fallen victim to an Authorised Push Payment (“APP”) scam.

What is an APP scam?

This sophisticated type of fraud sees individuals tricked into sending a payment to someone who is not who they claim to be. Fraudsters may pose as the victim’s bank, or even members of their family. The key element to an APP scam is that the victim has ‘authorised’ the payment, as this type of fraud relies on the victim voluntarily transferring money. This can happen where an individual is misled about why they are sending the money or about who is receiving it.

What do the new rules cover?

APP fraud payments made by Faster Payment or CHAPS Payment after 7 October 2024 will be eligible for a mandatory refund (subject to some exclusions).

• The refund will be made within 5 working days.
• Eligible claims will be refunded up to a limit set by the Payment Systems Regulator.
• There are instances where reimbursement rules may not apply. Find out more about how to report APP fraud and what to expect when making a claim from your bank. 

To make a successful claim, you must report the fraud as soon as possible and provide all the information your bank need to complete their investigation. They may ask you to report the fraud to the police or do that on your behalf.

Each claim is reviewed on a case-by-case basis, and banks may not refund all claims. For example, if they can see there has been gross negligence by the account holder. This could include ignoring direct warnings from the bank before making a payment or continuing to make further payments after reporting the fraud.