Banks receiving scam payments to take more responsibility under code update
Written by First Choice Radio on 8 February 2023
Guidance has been changed by The Lending Standards Board
More responsibilities will be placed on account providers receiving payments suspected to be fraudulent, under tweaks to a voluntary code to help prevent bank transfer scams.
The Lending Standards Board (LSB) oversees the code on authorised push payment (APP) scams, which was launched in 2019.
The voluntary code is designed to give people the confidence that, if they fall victim to an APP scam and have acted appropriately, they will be reimbursed.
The LSB published updates to the code on Wednesday, requiring signatory firms receiving scam payments to play a greater role in protecting the customer, by putting in place measures to stop such transfers.
Banks are expected to meet the requirements by December this year.
Firms which have signed up to the code will need to go further in identifying new and existing accounts at higher risk of being used by criminals.
By no later than December 2023, firms must be monitoring the payments that they are receiving to help them identify suspect inbound payments and accounts that might be being used by scammers.
This will help firms to stop the onward movement of funds they believe are linked to scams and to recover the money lost by customers who fall victim to these scams, the LSB said.
Fraudsters often move money quickly through multiple bank accounts, to make it harder to trace.
Emma Lovell, chief executive of the LSB, said: “It is essential that firms do all they can to stop criminals from opening bank accounts and using their services to receive scam payments.
“Strengthening the code’s provisions means putting in place another tripwire for fraudsters looking to steal people’s savings – not to mention the money needed for essential living costs.”
Consumer campaigners have previously raised concerns that the code is not always being applied consistently by account providers and, because it is voluntary, not all banks have signed up to it.
Some account providers, such as TSB and Nationwide Building Society, offer their own customer guarantees around bank transfer fraud.
Overall, this means the chances of getting refunded after being tricked into transferring money to a fraudster may depend on who someone banks with.
The Payments Systems Regulator (PSR) is consulting on proposals for mandatory reimbursement for victims of scams where more than £100 is stolen.
Ms Lovell said: “We share the PSR’s drive to ensure more victims are reimbursed where they are not to blame for the success of a scam, but are eager to ensure that fraud detection and prevention continue to be prioritised alongside reimbursement.
“Reimbursement can repair the financial impact on the victim, but it is still very much a lose, lose outcome.
“Victims lose because they will feel the after-effects and trauma of being scammed even after reimbursement and society loses as organised criminals reap the rewards of theft.
“We strongly believe that firms should continue to sign up and adhere to the CRM code.
“Scammers aren’t slowing down, and so we cannot take our eye off the ball.
“Only by stopping scams can customers truly be protected. Maintaining an industry code focused on preventing and detecting scams ensures firms have the tools to stop more scams and demonstrates their commitment to good customer outcomes and protections.”
Published: by Radio NewsHub