Authorised Push Payment (APP) scams are schemes by which fraudsters deceive account holders  into willingly transferring sums of money to the scammer – for example, by posing as a bank representative to persuade a customer to transfer funds to a ‘safe’ account; or by purporting to sell non-existent goods. Losses to APP scams are a growing problem, often including an element of social engineering, and have amounted to £355m in the first half of 2021, compared to losses of £207m in the first half of 2020. These figures remain conservative estimates, due to the widely acknowledged under-reporting of this problem. APP scams have now overtaken card fraud to become the most prevalent scam in the financial system.

The Payment Systems Regulator (PSR) has been monitoring the growth of APP fraud since 2015, and led the introduction of the Confirmation of Payee Initiative across the six largest UK banking groups. In 2019, UK banks agreed a voluntary code which committed to refunding APP scam victims unless there was evidence of gross negligence, or where a customer had ignored warnings prior to the payment. The PSR, however, wants further action and has this month opened a public consultation, following on from its call for views earlier this year. The PSR is inviting responses to its proposed measures to combat APP scams before the consultation closes on 14 January 2021. The measures focus on three specific areas:

  1. Publishing Scam Data: Requirement for the 12 largest UK Payment Service Provider (PSP) Groups, and the two largest banks in Northern Ireland, to publish scorecards every 6 months indicating their APP scam rates and rates of reimbursement to victim customers. The PSR will publicise comparative data, with the aim of increasing transparency across the playing field and to incentivise PSPs to actively tackle APP scams.
  1. Intelligence Sharing: Task PSPs with intelligence sharing to improve prevention and detection of APP scams.
  1. Wider Reimbursement: To work towards making reimbursement for scam victims mandatory.

Further proposals may follow in the future. These measures are a step in the right direction towards addressing what is clearly a serious and growing problem both for consumers and PSPs. That said, APP fraud remains a very broadly defined concept; the administrative and financial burden of reimbursement and reporting requirements may be significant, particularly for smaller PSPs. As the PSR notes, a greater differentiation between the different types of APP scams may be needed. When assessing who should bear the cost, should the scope of what constitutes ‘APP fraud’ be clarified, or even narrowed?