Industry announces new reimbursement process for ‘no blame’ scams
“We called on the government and regulators to work with industry to find a long-term solution to funding disclaimers, involving other sectors like online platforms.”
UK Finance is today announcing a change in the reimbursement process for so-called “no blame” cases of Authorized Push Payment (APP) scams under the Voluntary Industry Code.
The trade body is introducing a streamlined process that allows signatory banks to reimburse cases individually rather than through a shared central pot. This new process comes as the industry renews its call for a comprehensive, multi-stakeholder approach to tackle the root causes of these scams.
Starting today, the new process will mean that individual banks will oversee the end-to-end reimbursement process for APP scams and reaffirm the industry’s commitment to a fair outcome for victims of “no-no” cases. blame”.
The new framework only applies to financial institutions that have adhered to the APP voluntary code and their customers.
The no blame APP scam cases were previously funded through an interim arrangement, in which seven banks and building societies provide funding in a “ no blame ” central pot – with the signatory banks reimbursing customers directly in such cases and then claiming them.
APP scams occur when people are tricked into authorizing payment to an account they believe belongs to a legitimate beneficiary – but is in fact controlled by a criminal. In “blameless” cases, the customer and the bank have done everything expected of them under the Code, but the criminal is still in a position to commit the fraud. Criminals do this by bypassing both bank security systems and customer due diligence by exploiting vulnerabilities beyond the control of the financial sector, such as bogus investment announcements on online platforms.
Data from UK Finance shows that criminals are increasingly exploiting online platforms to commit fraud, with the increase in online scams particularly noticeable throughout the Covid-19 pandemic.
UK Finance urges the government to include economic crime within the scope of the Online Safety Bill. This would make tech companies responsible for protecting consumers from the threat of fraud and reducing the possibility for criminals to target the most vulnerable people with scams, as well as tackling crime that funds terrorism and exploitation and child sexual abuse.
Katy Worobec, Managing Director of Economic Crime at UK Finance, said: “The interim funding pot was originally put in place because we called on the government and regulators to work with industry to find a long-term solution to funding ‘blame-free’ cases involving other sectors like online platforms, which are used by criminals to perpetrate fraud, contributing to customer reimbursement. Unfortunately, this has not yet happened. “
Lloyds Banking Group Director Vim Maru commented: “There will be no change for our clients following the UK Finance announcement. When the central funding arrangement was first put in place, it was expected that these organizations from the larger ecosystem would contribute to it as well. As this has not happened, the arrangement is no longer necessary. Protecting our customers against fraud remains our priority and we are committed to reimbursing victims of scams in accordance with the voluntary code.
“Identifying and preventing fraud requires the combined efforts of all sectors. It is disappointing that many organizations outside of financial services have been slow to adopt measures to stop fraud, given that scams often originate outside the banking industry and we know it influences locations. where scammers operate. There needs to be as much emphasis on prevention as today on reimbursement, starting with the inclusion of financial fraud in the next bill on online security. “