UK banks reimbursed customers who fell victim to authorised push payment (APP) scams to the tune of £173m last year, according to payments regulator.
The latest figures from the Payment Systems Regulator (PSR) revealed that 88% of money reported lost to APP fraud by consumers was paid back. Consumers made 269,000 claims, according to PSR figures.
APP fraud occurs when criminals use fake websites and emails to trick consumers into authorising payments to them.
In 2023, new rules were introduced by the regulator, which meant the payment service provider (PSP) that sends the funds must repay the customer, and the PSP receiving the money must then pay 50% to the sending PSP. The only exceptions are when the customer has acted fraudulently or has acted with gross negligence.
APP scams are often instigated through social media platforms, where victims are contacted and tricked into making payments. But the social media companies are not expected to contribute to the repayments to bank customers.
Banks spend huge amounts of their IT budget on security, but authorised payments bypass the security systems banks have in place.
Banks have called for social media companies to take more responsibility for scams which emanate in their platforms.
One IT professional in the UK banking sector, who wished to remain anonymous, said social media companies need to do more and that banks are indirectly victims, but added that banks have the means to help reduce APP fraud.
“They are in a better place to prevent it,” they said. “If they collect enough data about how this is happening and they can work out profiles or patterns, they might have the means to come up with better ways to spot it and prevent it. With AI and pattern recognition, they probably can build a pretty good picture of what the scams are, how they get triggered, who gets duped.”
In 2023, Liz Ziegler, director of fraud and consumer at Lloyds Banking Group, said: “Banks have been at the forefront of tackling the epidemic of scams, but they cannot fight it alone. It’s high time tech companies stepped up to share responsibility for protecting their own customers. This means stopping scams at source and contributing to refunds when their platforms are used to defraud innocent victims.”
At the time, the bank said: “The reality is that almost 80% of scams start in the tech sector. By the time a victim reaches the point of making a payment through their bank account, it is very difficult to detect among the billions of genuine transactions which take place each year.”
Also in 2023, TSB called on social media giant Meta to do more to prevent online fraud that originates in its platforms, which it said could see UK consumers lose £250m to scammers this year.
The UK high street bank wrote to Meta calling on it to introduce fraud prevention measures because 80% of the money the bank has refunded is to customers defrauded by scams originating on the social media firm’s platforms.
Robin Bulloch, TSB CEO at the time, told Meta – which owns Facebook, Instagram and WhatsApp – that it must put in “tech interventions” to prevent users of its platforms falling victim to fraud.
In April, banks and tech firms are coming together in an initiative to share information on fraud to give them visibility of the attacks targeted at customers. The collaboration is part of Stop Scams UK’s intelligence-sharing pilots, which have brought together banks such as HSBC, NatWest and Santander with tech firms Amazon, Google and Meta.
Mobile telecommunications firm Three, BT, challenger bank Monzo, Lloyds Bank and tech giant Meta are among the members that published the Stop Scams UK joint statement.
According to the joint statement: “[This year] presents a unique opportunity for collaboration. Through Stop Scams UK, tech, telecoms companies and financial services providers have joined forces to share technology, data and intelligence to combat fraudsters on the platforms where they operate, helping to boost consumer confidence and promote economic growth.”
