Banks receiving scam payments to take more responsibility under code update

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Ore responsibilities will be placed on account providers receiving payments suspected of fraud under a voluntary code change to help prevent bank transfer scams.

The Lending Standards Board (LSB) oversees the Code on Authorized Push Payment (APP) scams, which was launched in 2019.

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The voluntary code is designed to give people confidence that they will be reimbursed if they fall victim to an APP scam and have taken the appropriate action.

The LSB published updates to the code on Wednesday, requiring signatory firms receiving fraudulent payments to play a greater role in customer protection by taking measures to prevent such transfers.

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Banks are expected to meet the requirements by December this year.

Firms that have signed up to the code will be required to identify new and existing accounts at high risk of being used by criminals.

Reimbursement can repair the financial impact on the victim, but it’s still too much damage, lose results.

Before December 2023, firms must monitor the payments they are receiving to help identify suspicious inbound payments and accounts being used by scammers.

The LSB said this would help prevent onward movement of funds by firms it believes are linked to scams and recover money lost by customers who have fallen victim to these scams.

Fraudsters often transfer money quickly through multiple bank accounts, making it difficult to trace.

LSB Chief Executive Emma Lovell said: “It is essential that companies can prevent criminals from opening bank accounts and using their services to receive scam payments.

“Strengthening the code’s provisions means laying another tripwire for fraudsters looking to steal people’s savings – not to mention the money needed for essential living costs.”

Consumer campaigners have previously expressed concerns that the code is not always being implemented consistently by account providers and that because it is voluntary, not all banks have signed up to it.

Some account providers, such as TSB and Nationwide Building Society, offer their own customer guarantees regarding bank transfer fraud.

Overall, this means that the chances of getting a refund after tricking a fraudster into transferring money can depend on who one banks with.

The Payments Systems Regulator (PSR) is consulting on proposals for mandatory restitution for victims of scams where more than £100 has been stolen.

Ms Lovell said: “We share PSR’s campaign to ensure that more victims are reimbursed where they are not to blame for the success of a scam, but are keen to ensure that reimbursement is accompanied Fraud detection and prevention should continue to be given priority.

“Reimbursement may repair the financial impact on the victim, but it is still too much loss, lose consequences.

“Victims lose because they will feel the after-effects and trauma of the scam even after restitution and society loses because organized criminals reap the rewards of theft.

“We strongly believe that firms should continue to sign up and follow the CRM Code.

“The scammers aren’t slowing down, and that’s why we can’t take our eye off the ball.

“Only by stopping scams can customers be truly protected. Maintaining an industry code focused on preventing and detecting scams ensures firms have the tools to prevent more scams and demonstrates their commitment to good customer outcomes and security.

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