Authorised push payment (APP) fraud is soaring, in 2019 there were 122,437 APP fraud cases in the UK, with losses hitting £456 million, up from £354 million in 2018. Of particular note is the sobering fact that financial providers only returned about a quarter of losses (£116 million) to victims.

UK Finance (the body that represents banks and other financial institutions) says that things are improving, with more money being reimbursed to victims under the voluntary Contingent Reimbursement Model code. The model, which has been in place since May 2019, which compels banks to reimburse blameless victims. Under the code, cases involving £101.1 million in losses were assessed, with £41.3 million (41%) reimbursed. Whilst reimbursement to victims under the reimbursement model will have been great relief to the victims of fraud a post event mechanism that ‘pays out’ after the fraudster has succeeded cannot be the best model, particularly with a model that shares the losses amongst the participating banks rather than the loss being suffered by the bank whose systems facilitated the loss.

Katy Worobec, MD, economic crime, UK Finance, says: “The introduction of the voluntary Code last May has meant more victims of authorised push payment fraud are receiving compensation, particularly in cases involving higher value losses and more sophisticated scams.”

Although some progress in being made on reimbursements, financial institutions and the industry as a whole are seeking to implement initiatives that stop the fraud before it happens.

Enter Confirmation of Payee….

Confirmation of Payee (CoP) is an account name checking service that the UK banks will be introducing to online banking payments. The service was finally due to go live by the end of March 2020, however given that the directed banks are managing COVID-19 related risks and are working hard to protect their customers, the regulator (Payment Systems Regulator – PSR) has considered their regulatory approach to the implementation of this system. If required implementation by directed banks can be delayed until the end of June 2020.

With these additional delays it looks like the introduction of Confirmation of Payee will be even more ‘bumpy’ and add an extra layer of payment friction, reimbursement models are helpful but act after a fraud has occurred – CoP might not be a silver bullet but ‘every little helps.

Find out all you need to know about Confirmation of Payee check out: https://northeypoint.com/confirmation-of-payee-101/

With the implementation of Confirmation of Payee delayed both UK Finance and the Payments System Regulator both advise caution when making payments.

UK Finance is telling the public to expect an uptick in APP scams, as crooks use the publicity surrounding Covid-19 to pose as genuine organisations such as the WHO through email, phone calls, texts and social media posts.

The Payment System Regulator advice is that we all must take steps to make sure we are protecting ourselves from any fraud. Fraudsters can be very convincing, but there are some things everyone can do to protect themselves from these devastating crimes:

– If you are contacted by phone, but the call does not sound, or feel, genuine – hang up.
– Do not feel pressurised into making a payment. Take some time to think about it first.
– Call back the person you think you should be making the payment to and check whether they have asked you to amend any payment details – they will be able to tell you immediately if you have been approached by a fraudster.
– If you think you have fallen victim to a scam, call your bank immediately and let them know.

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