MSE News

Banks to refund victims of money transfer scams

People who are tricked into transferring money to a fraudster may be able to get their cash back under proposed new rules – and several major banks are to start reimbursing victims straight away.

A new draft voluntary code for banks proposes that where a victim of a scam has met "the requisite level of care", they should be reimbursed.

Under current rules, when payments are fraudulently made without customers' authorisation, banks are generally obliged to give a refund. But when someone has been tricked into making a payment themselves, in what's known as an 'authorised push payment' (APP) scam, banks aren't obliged to give a refund.

The draft code has been published by the APP Scams Steering Group, made up of industry and consumer group representatives, and will open for consultation until 15 November. But representatives from several major banks, including Barclays, Lloyds Bank and Metro Bank, sit on the steering group and these banks will start implementing the code now.

For help on how to protect yourself from fraud, see our 30+ Ways to Stop Scams guide.

What is an 'authorised push payment' scam?

APP scams occur when someone transfers money from their own bank account to one belonging to a criminal. The lost money is then quickly transferred to numerous other accounts, often abroad, and withdrawn by the crooks.

Figures released by trade association UK Finance earlier this week show that in the first half of 2018 consumers lost £92.9 million because of this type of fraud.

What will be in the code?

Under the draft code, which isn't yet in force while it's being consulted upon, banks and other payment service providers would take measures to tackle APP scams, such as:

  • Detecting APP scams through measures such as analytics and employee training.
  • Preventing APP scams from taking place by taking steps to provide customers with effective warnings that they are at risk.
  • Responding to APP scams, for instance by delaying a payment while an investigation is conducted and, if necessary, carrying out timely reimbursement.

For a customer to be reimbursed, they will need to have made a transfer with a "requisite level of care". That could mean taking reasonable steps to check a payee was the person they were expecting to pay, and taking notice of any warnings from the bank. 

What does the steering group say?

Ruth Evans, who chairs the steering group, said: "Importantly, the code asks banks to hold themselves to account and for consumers to take steps to protect themselves.

"Over the last six months, we've worked hard to develop a draft voluntary code that can give consumers better protection from APP scams. We are committed to getting a final code in place in early 2019, but first we need to hear from others."

How to avoid being a victim

Industry body UK Finance has worked with the Government to produce help-sheets and a website to try to prevent consumers falling victim to this kind of scam. Its advice includes:

  • Remember that just because someone knows some personal details – such as your name and address or your mother's maiden name – that doesn't mean they are genuine.

  • Banks or trusted organisations such as the police will never contact you asking for your PIN or full password, or to transfer money to a safe account.

  • Always question uninvited approaches asking for information – it could be a scam. Instead, contact the company directly using a trusted email or phone number to check the request is genuine.

  • Never automatically click on a link in an unexpected email or text.

If you think you've been a victim of fraud, or if you suspect a fraudster has targeted you, report it immediately to your bank and then contact Action Fraud (you can call it on 0300 123 2040).