UK banks ordered to reimburse customers deceived by scams

LONDON, Sept 29 (Reuters) – Banks will have to reimburse customers tricked into sending money in a type of online scam that has become the biggest type of payment fraud in Britain, a proposed Thursday the regulator of payment systems.

The PSR has proposed that banks refund payments over 100 pounds ($107.39) as part of ‘Authorized Push Payment’ (APP) scams.

The maximum claim would be £1 million per payment, although many banks have lower limits. The claim period would not be less than 13 months.

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“Consumers should always exercise caution when sending payments, but these proposed measures will have the added protection that most of their larger payments will be automatically protected,” PSR said in a statement.

The bank from which the money was sent and the fraudster’s bank would split the refund bill, the PSR said. Processing fees and fees charged to customers cannot exceed £35.

Bank customers lost £583m to APP scams in 2021, up 39% from 2020, the PSR said.

He plans to introduce the new rule after parliament expands the powers of the PSR, expected in the first half of 2023.

Some of the banks that would be affected by the new rule include HSBC (HSBA.L), Natwest Group (NWG.L), Lloyds, Barclays (BARC.L), Banco Santander (SAN.MC) and Virgin Money (VMUK.L) .

PSR also plans to release data on how the top 25 banks reimburse customers and their levels of fraud.

Currently, 46% of customers are reimbursed for APP scams, largely handled by the issuing bank, and PSR expects that percentage to increase to over 95% under its new rule.

Several banks have already agreed to verify the names of the person paid by a transfer of money between banks, and the PSR wants to generalize this.

($1 = 0.9312 pounds)

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Reporting by Huw Jones; Editing by Lisa Shumaker

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