Tuesday, October 31, 2023
Chris Hemsley, managing director of the PSR, pointed out that APP fraud is a pervasive threat for banks, financial firms and individuals, stating the report sheds transparency on this issue.
“Our commitment to transparency and the forthcoming mandatory rules are key to strengthening efforts to prevent these frauds from happening in the first place,” he said in a statement. “Over the coming months, we will be bringing all payment firms into new reimbursement arrangements to give more consistent protection across the board. This is important because we can see from today’s report that this has not always been the case.”
After collecting data from banks and payment firms from January to December 2022, the PSR assessed how financial institutions reimburse APP fraud victims; how much money they lose to APP fraud and how much money they receive as a result of APP fraud.
Researchers found inconsistencies in how firms reimburse victims of APP fraud, noting some fully reimbursed victims, others partially reimbursed victims and some created onerous criteria that complicated the claims process. These variations, they noted, highlight a need for transparency and compliance with mandatory reimbursement policies that the PSR established in June 2023.
The PSR will continue collecting data and publish a new report highlighting trends in 2023, representatives stated, while working with the UK’s Financial Conduct Authority (FCA) to identify areas in need of improvement. Additional efforts are underway to show where APP fraud originates and how fraudsters target victims through social media, the PSR explained, noting these details will help stakeholders recognize and avoid these threats.
The PSR detailed customer losses due to APP fraud among 14 leading UK banks, citing the top four firms with the highest sending fraud rate as TSB, Santander, Metro and Monzo.
“For every £1 million TSB customers sent in 2022, £348 of that was lost to APP fraud. For Santander customers that is £322 per £1 million lost to APP fraud, and for both Metro and Monzo customers that is £280 per £1 million lost to APP fraud,” the PSR wrote. “In comparison, for every £1 million sent from customers of AIB Group, only £23 was lost to APP fraud.”
The PSR also reported that for every 1 million transactions made in 2022 by Monzo customers, 141 were reported as APP fraud.
“For Starling and Metrobank customers, 127 transactions in every million were reported as APP fraud and for Santander, for every 1 million transactions made 117 were reported as APP scams,” they wrote. “In contrast, for every 1 million transactions made by Danske Bank customers, only 39 were reported as fraud.”
Evgeniy Ivantsov, chief marketing officer at FYST, called the PSR’s APP Fraud Report a significant wake-up call for the payments industry.
“The PSR’s decision to release performance league tables for payment companies on the issue of APP fraud underscores the growing importance of transparency and accountability in safeguarding consumers and businesses,” he said. “These league tables provide a clear picture of who excels in fraud prevention, ultimately benefitting both the industry and its stakeholders.”
Conversely, Ivantsov noted, the report shines a light on poorly-performing companies, giving them a chance to improve their service offerings. All types of fraud are a huge threat to our industry, he added, stating we must do everything in our power to protect our clients and customers from nefarious tactics.
A full copy of the PSR’s report is available at psr.org.uk/information-for-consumers/app-fraud-performance-data/
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