Guide to UK’s New APP Fraud Reimbursement Cap: What It Means for Risk & Compliance

1. Overview of the PSR’s New Fraud Reimbursement Cap
2. What is APP Fraud?
3. Changes to the Fraud Reimbursement Plan: Key Details
4. Why Was the Cap Reduced?
5. Impact on Banks and Financial Institutions
6. What Should Risk and Compliance Leaders Do Now?
7. Consumer Protections Under the New Cap
8. What Critics Are Saying
9. Potential Benefits of the New Cap
10. Future Outlook: What’s Next for APP Fraud Reimbursement?
11. FAQs

Overview of the PSR’s New Fraud Reimbursement Cap

The UK Payment Systems Regulator (PSR) recently announced a significant reduction in the reimbursement cap for victims of authorized push payment (APP) fraud, a type of scam where individuals are tricked into transferring funds to fraudsters posing as legitimate payees. The new limit, which comes into effect on October 7, 2024, reduces the maximum reimbursement per claim from £415,000 to £85,000. This cap now aligns with the Financial Services Compensation Scheme (FSCS) limit​.

The original higher cap was designed to offer strong consumer protections in response to the growing threat of APP fraud, which cost UK residents £433 million in 2023. However, after pressure from banks and payment service providers (PSPs), the PSR opted to lower the cap, citing concerns about the financial burden this higher liability posed for institutions. These organizations warned that maintaining the £415,000 cap could discourage investment in the UK fintech market due to increased operational costs and risk. ​
Despite the reduction, the PSR has emphasized that over 99% of APP fraud claims will still be covered under the new £85,000 limit, as most fraudulent transactions fall below this threshold. This change is expected to strike a balance between protecting consumers and ensuring that payment institutions can manage their liabilities without severely impacting their business operations​.

In addition to APP fraud within the Faster Payments system, the PSR’s revised reimbursement framework will also apply to transactions made via CHAPS (Clearing House Automated Payment System), a real-time gross settlement system used for high-value payments. Both payment systems will adhere to the same reimbursement cap to create consistency and limit opportunities for fraud migration across payment methods​.

As part of this policy shift, the PSR is also launching a post-implementation review to assess the cap’s impact and ensure that it continues to meet both consumer protection needs and financial industry requirements​.

This change represents a significant shift in the UK’s approach to tackling APP fraud, with the potential to reshape fraud prevention strategies across the financial services sector.

What is APP Fraud?

Authorized Push Payment (APP) fraud is a type of scam where a victim is tricked into authorizing a bank transfer to an account controlled by a fraudster. Unlike other types of fraud, such as card fraud where the transaction is unauthorized, in APP fraud, the victim is manipulated into willingly transferring funds, making it harder to reclaim the money. This type of fraud occurs in real-time through bank transfers, often involving schemes that impersonate trusted organizations or individuals.

How APP Fraud Occurs

In APP fraud, scammers typically use tactics like social engineering, where they build trust or create a sense of urgency to deceive the victim. They often impersonate legitimate entities, such as banks, the police, or known service providers, to convince the victim to transfer money. Common examples include:

• Impersonation Fraud: Fraudsters pose as a trusted figure (e.g., bank official, solicitor, or even a friend) and persuade the victim to transfer money into what they believe is a legitimate account.
• Invoice Scams: Fraudsters intercept legitimate invoices and change payment details, tricking businesses into sending payments to the wrong account.
• Investment or Purchase Scams: Victims are tricked into paying for goods or investments that don’t exist.

APP fraud is significant in the UK financial ecosystem because of its widespread occurrence and high financial impact. In 2023 alone, UK consumers lost over £433 million to APP fraud​. While the volume of fraud cases continues to increase, the losses often affect individuals and businesses alike, making it a pressing issue for financial institutions.

APP fraud poses a unique challenge for the financial industry because victims authorize the payments, making the recovery of funds complicated. It requires banks and payment service providers to invest in robust fraud detection systems to intercept fraudulent transactions before they happen, while also providing consumer education to help prevent fraud.

Changes to the Fraud Reimbursement Plan: Key Details

In a significant shift, the UK Payment Systems Regulator (PSR) has reduced the maximum reimbursement cap for victims of Authorized Push Payment (APP) fraud from £415,000 to £85,000. This new PSR APP fraud liability shift is set to take effect on October 7, 2024, and aligns with the Financial Services Compensation Scheme (FSCS) limit. The move aims to provide consistent fraud protections across financial services, particularly aligning APP fraud claims with the FSCS’s maximum reimbursement for other financial loss scenarios​.

The original £415,000 cap was designed to offer extensive protection for high-value fraud claims. However, following feedback from smaller banks and payment service providers (PSPs), the PSR recognized concerns about the financial risks and potential market disruption the higher cap could cause. Specifically, smaller institutions expressed that such high liabilities could impede their ability to operate effectively, leading to the risk of underinvestment in the UK fintech sector​.

Despite the reduction, the PSR reassures that the new £85,000 limit will cover over 99% of APP fraud cases, as most fraudulent transactions fall well below this amount. This new cap balances the need for consumer protection with the operational realities of payment service providers. Additionally, this cap applies not only to Faster Payments but also to transactions made through the CHAPS (Clearing House Automated Payment System), ensuring a unified approach across different payment networks​.

The PSR has committed to reviewing the effectiveness of the new cap and its impact on both consumers and financial institutions through a post-implementation review, ensuring that the limit continues to meet its objectives in reducing fraud while managing financial risks for PSPs​.

This change represents a critical update in the UK’s financial regulatory landscape, encouraging banks to strengthen their fraud prevention measures while ensuring that consumers are still adequately protected against financial scams.

Why Was the Cap Reduced?

The decision by the Payment Systems Regulator (PSR) to reduce the Authorized Push Payment (APP) fraud reimbursement cap from £415,000 to £85,000 was driven largely by concerns raised by smaller banks and payment service providers (PSPs). These institutions argued that the higher cap posed significant financial risks and operational challenges, particularly for smaller firms, which could undermine their stability and inhibit their ability to operate effectively.

Financial Burden and Stability Concerns

Many smaller banks and PSPs expressed concerns that the original £415,000 cap would impose an excessive financial burden on their operations. If the cap were maintained at that level, institutions would be liable for large-scale fraud reimbursements, which could severely impact their financial health. Smaller PSPs, in particular, argued that the risk exposure to such high-value fraud cases could make it difficult to maintain sufficient reserves, leading to potential insolvency risks​.

These pressures were especially felt by smaller financial institutions, which operate with tighter profit margins than large banks. The potential for high-value fraud claims would require them to allocate substantial resources to fraud reimbursements, which could compromise their ability to invest in other areas, such as improving fraud detection technology. Additionally, absorbing these large payouts could destabilize their financial position and create operational disruptions​.

Market Impact and Fintech Investment Concerns

Another key factor in the reduction of the cap was the potential impact on the broader fintech market. Industry stakeholders, including the Payments Association, voiced concerns that the high cap would discourage investment in the UK’s fintech sector. They argued that increased financial liabilities could deter new entrants from participating in the payments market due to the perceived prudential risks, particularly in the context of real-time payment systems​.

High operational costs associated with managing these liabilities could make it difficult for fintech companies to scale their businesses or compete in the market, potentially stifling innovation and investment. The cost and friction introduced by such financial risks would raise the barriers to entry, making the UK fintech sector less attractive to investors and hindering its growth​.

Rationale Behind the PSR’s Decision

Recognizing these concerns, the PSR decided to lower the cap to £85,000, a figure more manageable for smaller institutions and one that aligns with the Financial Services Compensation Scheme (FSCS This level of reimbursement still provides strong consumer protection, covering over 99% of APP fraud cases, while mitigating the operational risks that banks and PSPs would face under the original cap​.

The PSR believes this new cap will maintain the incentives for banks to invest in fraud prevention measures without overburdening their financial operations. By striking a balance between consumer protection and institutional stability, the reduced cap ensures that both consumers and the financial services industry can navigate the risks associated with APP fraud more effectively. Additionally, the PSR has committed to reviewing the cap post-implementation, allowing it to make adjustments based on the evolving needs of the market​.

This decision highlights the PSR’s effort to promote a sustainable regulatory environment, where both consumer protection and financial stability are considered to foster a healthy financial ecosystem.

Impact on Banks and Financial Institutions

The Payment Systems Regulator (PSR)’s decision to reduce the Authorized Push Payment (APP) fraud reimbursement cap from £415,000 to £85,000 is expected to have a notable impact on banks and payment service providers (PSPs), particularly concerning their liabilities and fraud prevention strategies.

Reduced Financial Liabilities

The lower reimbursement cap significantly reduces the financial liability of banks and PSPs when dealing with fraud claims. Under the previous £415,000 cap, institutions faced the possibility of having to cover large sums of money in high-value fraud cases, which posed a considerable risk, especially for smaller PSPs. These smaller institutions were more vulnerable to financial strain due to the higher liability. By reducing the cap to £85,000, banks and PSPs can manage their risk more effectively, easing the financial burden and allowing them to operate with greater stability​.

Potential Shift in Fraud Prevention Investments

There is concern within the industry that the reduced cap could decrease banks’ incentives to invest heavily in fraud prevention technologies. With lower potential payouts, banks might deprioritize investments in cutting-edge fraud detection systems. However, the PSR believes that the new reimbursement limit will still provide enough incentive for financial institutions to focus on preventing fraud, as the majority of APP fraud cases are under the new cap. Moreover, institutions still share liability for these cases, meaning they have a stake in minimizing fraud incidents through early detection​.

Focus on Improved Fraud Detection and Procedures

Despite the reduction in the cap, banks and PSPs are expected to improve their fraud detection systems and customer warnings, particularly as part of the consumer standard of caution. Under the new rules, PSPs must assess whether customers took reasonable precautions before approving payments. This encourages banks to continue enhancing their fraud detection processes, such as issuing real-time alerts and improving know-your-client (KYC) checks​.

In conclusion, while the reduced cap alleviates financial pressure on institutions, it is likely that banks and PSPs will still invest in fraud prevention to limit their exposure and safeguard consumer trust. The PSR’s decision aims to balance financial sustainability with consumer protection while ensuring that institutions continue to develop robust anti-fraud mechanisms.

What Should Risk and Compliance Leaders Do Now?

In light of the Payment Systems Regulator’s (PSR) reduction of the Authorized Push Payment (APP) fraud reimbursement cap from £415,000 to £85,000, risk and compliance leaders need to reassess and adapt their strategies to maintain strong fraud prevention and consumer protection systems. The regulatory shift, which takes effect on October 7, 2024, provides an opportunity for organizations to ensure that their policies and systems are up to date with the new requirements while continuing to minimize risk and protect their customers from fraud.

Here’s what risk and compliance leaders should focus on:

1. Audit and Update Internal Processes

Risk and compliance leaders should assess whether their internal procedures align with the PSR’s new regulatory requirements:

• Claims processing

  Ensure that the organization has streamlined its claims processing system to handle APP fraud claims efficiently. This includes implementing systems that can quickly assess whether a consumer meets the consumer standard of caution for reimbursement​.

• Cross-department collaboration

  Encourage collaboration between compliance, fraud prevention, and customer service teams. These departments must work closely to ensure fraud is identified early, and claims are processed in accordance with the new regulations​.

• Staff training

  Equip staff with the necessary tools and knowledge to handle fraud detection and reimbursement requests. With the introduction of the consumer standard of caution, staff need to be trained on how to evaluate whether customers took reasonable steps to prevent fraud​.

2. Focus on Vulnerable Customers

Under the new rules, protections for vulnerable customers have been enhanced. Compliance leaders need to:

• Identify and protect vulnerable customers

  Implement processes to identify vulnerable customers (e.g., elderly or digitally inexperienced individuals) and offer them additional safeguards against fraud. These customers are often targeted by fraudsters and may require more assistance during the transaction process​.

• Customize fraud prevention for vulnerable groups

  Tailor fraud detection systems to monitor for patterns that are commonly associated with vulnerable individuals falling victim to scams, such as repetitive transactions with large sums​.

3. Enhance Fraud Detection and Monitoring Systems

Despite the reduced cap, it is essential for banks and payment service providers (PSPs) to continue investing in fraud detection technologies. This includes:

• Real-time monitoring and analytics

  Implement more sophisticated real-time fraud detection systems that can identify unusual patterns, suspicious behaviors, and high-risk transactions before they are completed​.

• AI and machine learning

  Leverage AI and machine learning tools to improve the accuracy of identifying fraudulent transactions. These systems can be trained to recognize the signs of APP fraud, including behavioral anomalies and transactional red flags​.

• Improved Know-Your-Customer (KYC) checks

  Ensure that your KYC processes are robust, as fraudsters often exploit weak verification systems. Strengthen onboarding procedures to detect fraudulent accounts early​.

• Portfolio “Identity” Reviews

  Identify and close accounts that may be held by “synthetic identities” or stolen identities as well as accounts that may have been taken over. These accounts help fuel fraudulent money movement and perpetrate scams that could end up creating financial loss from APP fraud.

4. Refine Consumer Protection and Education Policies

Given that the majority of fraud victims will still be reimbursed under the new cap, compliance leaders should:

• Strengthen customer communication and warnings

  Update customer-facing materials to provide clearer, real-time warnings about potential scams. This could include warnings during the transaction process and educational campaigns about the latest fraud schemes​.

• Develop a customer assistance program

  Introduce or enhance customer support services specifically tailored to help consumers identify fraud risks and respond quickly if they believe they have been scammed. This can help minimize losses before the transaction is completed.

• Emphasize the consumer standard of caution

  Ensure that customers are aware of the steps they need to take to protect themselves, such as carefully verifying recipient information and recognizing warning signs of fraud. Educating customers can also protect institutions by reducing the number of fraudulent claims​.

5. Monitor Regulatory Changes and Industry Trends

The PSR has indicated that it will conduct a post-implementation review to assess the effectiveness of the new cap. Risk and compliance leaders should stay informed of any further regulatory changes and participate in industry discussions to ensure their institutions remain compliant:

• Keep an eye on post-implementation reviews

  Engage with regulators and participate in consultations to provide feedback and stay ahead of any new regulatory adjustments​.

• Benchmark against industry best practices

  Regularly assess how your institution’s fraud prevention strategies compare with those of industry peers, ensuring that you are adopting the most effective approaches available.

By updating fraud detection systems, refining internal processes, and enhancing consumer education, risk and compliance leaders can ensure that their organizations are well-prepared to navigate the PSR’s changes while continuing to safeguard their customers and maintain regulatory compliance.

Consumer Protections Under the New Cap

The reduction of the Authorized Push Payment (APP) fraud reimbursement cap from £415,000 to £85,000 has raised concerns about whether the new limit provides adequate protection for consumers. While the cap is lower, the Payment Systems Regulator (PSR) has emphasized that it still covers the vast majority of APP fraud cases. Here’s how the change impacts consumers and addresses these concerns.

Majority of Fraud Cases Still Covered

According to the PSR, over 99% of APP fraud claims will fall under the new £85,000 cap, meaning the vast majority of consumers who fall victim to fraud will still be fully reimbursed. This is largely because most fraud incidents involve smaller sums of money, well below the original £415,000 limit, which was primarily designed to protect against rare high-value scams​. The PSR’s data suggests that only a small fraction of APP fraud cases exceed this new threshold, ensuring that the new cap will protect the vast majority of consumers without compromising industry stability​.

Increased Consumer Awareness and Education

To further safeguard consumers, the PSR continues to work with banks and PSPs to improve fraud detection measures and customer education. Consumers are being encouraged to stay vigilant and informed about the risks of APP fraud, and banks are expected to play a more proactive role in preventing fraud before it occurs​. Educational campaigns and alerts, especially regarding scams involving impersonation or fake invoices, are critical components of ongoing efforts to prevent consumers from falling victim in the first place.

Risk for High-Value Victims

Despite the PSR’s assurances, there are concerns about how the new cap affects victims of high-value fraud cases, particularly those who transfer large sums of money in business or investment transactions. For victims of fraud exceeding the £85,000 limit, reimbursement will no longer cover the full amount, potentially leaving them exposed to significant financial losses​.

High-value victims, such as those involved in real estate transactions or major purchases, may need to rely on additional protections, such as insurance or legal recourse, to recover their funds beyond the reimbursement limit. These concerns underline the importance of banks implementing robust anti-fraud measures to detect and prevent large-scale fraud before it occurs​.

Encouraging More Proactive Fraud Prevention

While some critics argue that the lower cap reduces banks’ financial motivation to prevent fraud, the PSR contends that this will still encourage payment service providers (PSPs) to strengthen their fraud detection systems. By minimizing the number of fraud incidents, PSPs can avoid even the smaller liability under the new cap, while maintaining consumer trust and regulatory compliance​.

Balance Between Protection and Industry Sustainability

Ultimately, the new £85,000 cap aims to balance the need for consumer protection with ensuring the financial sustainability of banks and PSPs. By aligning the cap with the Financial Services Compensation Scheme (FSCS) limit, the PSR ensures that consumers are still protected in the majority of cases, while reducing the potential financial strain on institutions​.

The post-implementation review that the PSR has committed to conducting will also ensure that the policy is adjusted as needed, based on its effectiveness in protecting consumers and preventing fraud​.

In conclusion, while the reduction of the cap may affect a small percentage of high-value victims, the vast majority of APP fraud victims will continue to be fully protected under the new limit, and ongoing efforts in fraud prevention and consumer education are designed to mitigate the risks of future fraud.

What Critics Are Saying

The decision by the Payment Systems Regulator (PSR) to reduce the Authorized Push Payment (APP) fraud reimbursement cap from £415,000 to £85,000 has sparked significant debate. Industry professionals have voiced several concerns about the potential drawbacks of this change, particularly its impact on banks’ and payment service providers’ (PSPs) incentives to invest in robust fraud prevention measures.

Reduced Incentives for Fraud Prevention

One of the most prominent criticisms is that lowering the reimbursement cap could weaken banks’ motivation to invest in advanced fraud detection and prevention systems. With the original £415,000 cap, banks faced substantial financial exposure in cases of high-value fraud, providing strong incentives to implement rigorous fraud prevention technologies and processes. By reducing the cap to £85,000, critics argue that the financial risk is now smaller, which could lead banks to deprioritize investments in innovative fraud detection tools and systems​.

Dan McLoughlin, a fraud and security specialist, expressed concern that the dramatic reduction in the cap “takes away a big part of banks’ financial motivation to prevent fraud.” He highlighted that while most APP fraud cases are below the new cap, the lower liability reduces the pressure on banks to make tough decisions and invest heavily in fraud prevention infrastructure​.

Potential Decrease in Consumer Protections

Another criticism revolves around the fear that consumers may no longer receive adequate protection in higher-value fraud cases. Under the new limit, victims of large-scale fraud—such as those involving real estate transactions or business payments—could be left with significant financial losses that exceed the £85,000 cap. Critics argue that by reducing the cap, the PSR is shifting more responsibility onto consumers to safeguard themselves, which could be problematic given the increasing sophistication of APP fraud schemes​.

This concern is echoed by Riccardo Tordera-Ricchi, head of policy at the Payments Association, who warned that the reduced cap might make the UK fintech market less attractive for investment, as it increases prudential risks while potentially leading to higher costs and friction in real-time payments.

Risk of Undermining Progress in Fraud Prevention

Several industry experts also caution that the reduced cap might undermine the long-term progress made in combating APP fraud. Over the last few years, banks and financial institutions have invested heavily in fraud prevention technologies, partly because they faced significant financial consequences under the higher cap. There is concern that the new cap will shift the focus away from proactive fraud prevention and towards limiting liability through reactive measures, such as claim processing.

For instance, some experts worry that with lower reimbursement liabilities, banks may cut back on fraud detection innovations that are designed to intercept fraud before it occurs. This could result in more consumers falling victim to fraud, even if they are eventually reimbursed up to the new cap​.

While the PSR’s decision to reduce the reimbursement cap aims to balance consumer protection and industry sustainability, critics argue that it could have unintended consequences. From reducing banks’ incentives to invest in fraud prevention to potentially leaving high-value victims exposed, the new cap has raised concerns among industry professionals. The PSR will need to monitor the impact of this change closely to ensure it does not hinder the progress made in combating APP fraud​.

Potential Benefits of the New Cap

The decision by the Payment Systems Regulator (PSR) to reduce the maximum Authorized Push Payment (APP) fraud reimbursement cap from £415,000 to £85,000 offers several potential benefits for the financial industry and consumers alike. Beyond addressing the operational concerns of banks and payment service providers (PSPs), this change could also lead to improvements in the way fraud is managed and mitigated across the UK’s financial ecosystem.

1. Reducing Fraudulent Reimbursement Claims

One key benefit of the new cap is its potential to reduce fraudulent reimbursement claims. By setting a more manageable reimbursement limit of £85,000, the PSR aims to discourage fraudsters from staging high-value claims or exploiting the system. Under the previous £415,000 cap, fraudsters had greater incentive to manipulate or fabricate claims involving large sums of money. The lower cap is expected to make such scams less attractive, limiting the scope for abuse and ensuring that legitimate fraud victims are prioritized​.

Additionally, by reducing the financial exposure of banks and PSPs to large claims, institutions are likely to be more vigilant in assessing and investigating fraud claims. This could lead to more accurate and timely fraud prevention efforts, ultimately protecting both financial institutions and consumers from further losses​.

2. Aligning with the Financial Services Compensation Scheme (FSCS)

Another major benefit of the new cap is that it brings APP fraud reimbursement in line with the Financial Services Compensation Scheme (FSCS), which also has an £85,000 limit. This alignment creates greater consistency in consumer protection across various financial services. Consumers now have a clearer understanding of the maximum protection they can expect in the event of fraud, whether it is related to savings, investments, or APP fraud​.

By creating this uniformity, the PSR helps streamline regulatory frameworks and minimizes confusion among consumers about their rights and the limits of their financial protections. It also reduces the complexity for financial institutions that need to comply with various compensation schemes, making it easier for them to implement consistent fraud prevention and reimbursement policies​.

3. Encouraging a Balanced Approach to Risk Management

The new cap helps balance the need for consumer protection with the financial stability of banks and PSPs. Under the previous higher cap, institutions faced significant financial exposure in cases of high-value fraud claims, particularly smaller PSPs, which could have struggled to manage large-scale reimbursement liabilities​.

By capping reimbursement at £85,000, the PSR has reduced the operational risks faced by banks and PSPs while still ensuring that over 99% of APP fraud claims will be covered under the new limit. This encourages financial institutions to continue investing in fraud prevention technologies and processes, knowing that their potential liabilities are now more manageable​.

4. Incentivizing Proactive Fraud Prevention

While some critics argue that reducing the cap could lead to less motivation for banks to prevent fraud, the opposite may occur. By capping liabilities at a lower level, financial institutions are likely to focus more on proactively preventing fraud rather than merely relying on post-fraud reimbursement. Investing in fraud detection systems, consumer education, and early intervention strategies becomes more cost-effective when the potential losses from large-scale reimbursement claims are reduced​.

Institutions may also be more inclined to collaborate and share insights on fraud prevention techniques, leading to a more coordinated industry-wide response to APP fraud and reducing the overall occurrence of fraudulent activities.

The new £85,000 reimbursement cap offers several potential benefits, from reducing fraudulent claims and aligning with existing compensation schemes to encouraging banks and PSPs to take a more proactive approach to fraud prevention. While there are concerns about how the new cap will affect victims of high-value fraud, the PSR’s decision seeks to balance consumer protection with financial stability, ensuring that both consumers and financial institutions are better equipped to handle the risks of APP fraud​.

Future Outlook: What’s Next for APP Fraud Reimbursement?

In the US, there is substantial pressure from senators and regulators for banks, fintechs and payment processors to take on some of the losses consumers have shouldered for APP fraud.

Since October 2023, banking industry executives and regulators have volleyed back and forth expressing their desired and differing paths forward. Zelle, the leading P2P processor in the US, has worked to create new rules for banks to cover certain types of consumer scams.

Will regulators create policies that will be enforced, or will the industry move toward self-regulation? Only time will tell.

FAQs

1. What is the new fraud reimbursement limit in the UK?

   The PSR has reduced the maximum reimbursement cap for victims of authorized push payment (APP) fraud from £415,000 to £85,000, effective from October 7, 2024. This change aligns with the Financial Services Compensation Scheme (FSCS) limit​.

2. Why did the PSR lower the fraud reimbursement cap?

   The decision to lower the reimbursement cap came after concerns from banks and smaller payment institutions about the financial burden posed by the previous higher limit. The lower cap aims to balance protecting consumers from fraud while ensuring that smaller institutions can manage their risk​.

3. How will the reduction in fraud reimbursement affect banks and consumers?

   For banks, the lower cap reduces their financial liability, which might decrease their motivation to invest in high-level fraud prevention. For consumers, most APP fraud claims will still be covered under the new cap, as the majority of fraudulent transactions are under £85,000​.

4. Will the lower fraud reimbursement cap reduce fraud?

   Some argue that the lower cap might discourage banks from preventing fraud proactively, while others believe that it could reduce fraudulent reimbursement claims by making it less profitable for fraudsters.

5. What is APP fraud, and how does the reimbursement work?

   APP fraud involves scammers tricking individuals into transferring money into fraudulent accounts. Under the PSR’s reimbursement scheme, victims can claim back lost funds, with the amount now capped at £85,000 per incident​.

6. Which types of payments are covered by the PSR’s fraud reimbursement policy?

   The reimbursement policy applies to Faster Payments and, as of September 2024, also includes CHAPS (Clearing House Automated Payment System) payments. Both systems will follow the £85,000 cap.

7. What are the risks of the new fraud reimbursement limit?

   Critics argue that reducing the reimbursement cap could shift more of the burden onto consumers to protect themselves from fraud, potentially decreasing the motivation for banks to implement robust anti-fraud systems.

Join Donna Turner and Mike Cook for a candid conversation on American and international shifts in liability of APP Fraud and money movement.