Yesterday, the Financial Conduct Authority (FCA) implemented new fraud rules designed to help victims of authorisation push payment (APP) fraud to seek redress from the recipient bank or building society being used by the scammer.
APP fraud is when fraudsters hoodwink victims into sending them money under false pretences. According to UK Finance, APP fraud losses have shot up significantly with 43,975 cases and a total loss of £236m reported in 2017.
Under the new financial fraud rules, victims will be able to complain to the bank that receives funds sent in error to a fraudster, as well as their own bank. Previously, victims could only complain to their own bank, which dispatched the funds.
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The receiving bank now has to accept the complaint, if it relates to how it’s handling the situation, and potentially could have to compensate victims for any issues.
If the victim is unsatisfied with the way the recipient bank has handled the incident, they can escalate their complaint to the Financial Ombudsman Service (FOS). Unfortunately for those who have previously fallen victim to APP fraud, the rules cannot be applied retrospectively, so victims will only benefit from the change going forward.
Previously, FOS has said that the banks involved in APP disputes tend to blame the customer. Furthermore, they weren’t obliged to reimburse victims to fall prey to this sort of fraud. However, at the beginning of 2019, most major banks signed up to a new voluntary code to help clarify when banks are liable to reimburse victims.
The code specifies that where victims of scams have met “the requisite level of care”, such as taking notice of any warnings from the bank, they should be reimbursed. The code is still being developed. it will also include duty of care on the part of the banks, including processes to confirm the name on the destination bank