New rules introduced in the UK today to refund victims of authorized push payment (APP) scams could still leave many high and dry, a non-profit has warned.
The UK Chartered Trading Standards Institute (CTSI), which is dedicated to consumer protection and fair business practices, argued that the cap on the Mandatory APP Reimbursement Scheme is too low.
The Payment Systems Regulator (PSR) announced on September 25 that it was lowering the sum from £415,000 ($542,400) to £85,000 ($111,100).
At the time, it said its decision was made after giving “careful consideration to all the feedback and information received” and claimed that over 99% of APP fraud claims would still be covered.
Read more on UK fraud: Authorized Push Payment Fraud Cases Surge 12% Annually
However, the CTSI argued that the “drastic” reduction in the cap came after intense lobbying from “sections of the payment industry” and could hit those caught out by high-value scams such as investment and property fraud.
It cited estimates from the National Trading Standards (NTS) Scams Team that fraud is costing UK consumers £5-10bn ($6.5-13bn) annually.
If a bank rejects their initial claim, fraud victims could seek redress through the Financial Ombudsman Service (FOS), but CTSI said that the process would place further strain on individuals who have already suffered the trauma of being defrauded.
The CTSI called on the PSR to reinstate the cap to its original level after a promised 12-month review.
According to banking lobby group UK Finance, APP fraud losses hit nearly £460m ($600m) in 2023, with 62% of this figure returned to victims.
It claimed that three-quarters (76%) of such scams originated online while 16% came from “telecommunications,” although the latter accounted for 43% of losses.
Last week, Meta announced that an information-sharing pilot with UK high street lenders would be extended, after it enabled the social media giant to remove 20,000 accounts run by fraudsters as part of a major concert ticket scam targeting US and UK users.
It also emerged last week that the Treasury is planning to hand new powers to banks to delay suspicious payments by up to three days while they investigate.