The U.K. Payments System Regulator (PSR) is taking steps to address the 100 payment scams hitting consumers and businesses every day.
The financial watchdog has published a response to a complaint filed by consumer advocacy group Which? more than a year ago. That complaint highlights the challenge consumers and businesses face when getting hit by so-called push payment scams, in which an individual or company is tricked into sending money to a fraudulent account to pay for goods or services.
Banks don’t reimburse their consumer and business customers hit by such a scam, unlike reimbursements made for fraudulent payments on card products, reports in the Telegraph explained. Now, the Payments System Regulator said it is working to establish a compensation scheme to more easily enable scam victims to receive compensation.
According to the watchdog, individuals lose an average of nearly $4,000, while businesses hit by the scam lose seven-fold, an average of more than $28,000 per scam. Analysts noted an estimated 19,000 push payment scams were carried out in the first six months of 2017 alone, making it the second-largest scam type in the nation, behind card fraud.
Some of these scams are initiated via the Business Email Compromise (BEC) scam, which involves criminals sending seemingly legitimate invoices to business professionals with requests for payment. Because payers willingly initiate the bank transfer themselves, liability has remained on the payer.
Now, however, the PSR is looking at a “reimbursement model” for banks to follow to compensate victims, though reports noted it would not be mandatory. Reimbursement would also only be available after a review found the victim could not have “reasonably” prevented the fraudulent payment, which will also likely be difficult to define. The PSR is seeking comment and consultation on such proposals, reports said.
The initiative follows weeks after a court in Canada ruled a cyber insurance provider did not have to cover losses one of its corporate clients endured as the result of a BEC scam involving payments made by the company into a fraudulent account.