B2B Payments

UK Watchdog Wants Banks To Change Push Payments Fraud Strategy

U.K. consumer watchdog Which? is calling for better protections against push payment scams, according to reports.

A press release by Which? issued Monday (Feb. 19) warned that Authorized Push Payment (APP) fraud is on the rise. The watchdog is calling for change in how banks handle this type of crime when it affects their customers.

Push payment fraud occurs when a business or individual is coaxed into sending money for seemingly legitimate invoices when a scammer requests payment. This can come in the form of a business email compromise, in which a scammer sends an invoice from a seemingly legitimate supplier.

Push payments involve a bank or financial service provider receiving instructions from a customer to send money to another account when authorized by that customer.

Which? pointed to the rising use of mobile and online technologies, as well as the rise of online banking, as two major factors behind the growth in APP scams. The U.K.’s Payment Systems Regulator (PSR) found about 100 scams hit businesses or consumers every day, according to the press release. The scale of this crime means banks do not reimburse their customers when hit with a scam.

Researchers at Which? found “a crucial discrepancy” between how financial institutions (FIs) deal with APP scams and how they handle other types of fraud. Banks take liability for losses in other types of fraud, but because customers authorize the payment in an APP scam, the banks do not hold liability. The Payment Systems Regulator found businesses lose an average of more than $28,000 when they are hit by this type of fraud.

Because of this, Which? said it filed a “super complaint” against the Payment Systems Regulator; the press release said the PSR and the Financial Conduct Authority are collaborating on raising awareness of APP scams and are developing a policy framework that may address how banks take liability when this scam occurs.

“There is on silver bullet, but more can be done to prevent these scams in the first instance, and to respond faster when it does happen,” said PSR Managing Director Hannah Nixon in a statement.

The PSR and Which? are exploring the use of artificial intelligence to intervene in cases of APP fraud, they said.


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