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British banks are cutting out the middleman in reimbursing people who have fallen victim to online scams.
Trade organisation UK Finance is changing the way it compensates bank customers who have sent money to criminals in “no-blame” cases, Law360 reports. “No-blame” cases are when a person took every measure to ensure the payment was legitimate, but was still scammed.
The repayment system, called the authorized push payment voluntary code, was previously an intermediary pot money that banks could tap into to repay customers. Now, banks will give the money directly to defrauded customers, Law360 reports.
UK Finance Managing Director of Economic Crime Katy Worobec told Law360 that the central funding pot was initially set up so that government, regulators, and industry could find a long-term solution to funding “no-blame” cases. She added that UK Finance had hoped that the solution would include government and watchdog groups working with social media and other online platforms to reimburse customers.
“Sadly, that is yet to happen,” she said.
UK Finance said that no scam victim would lose out because of the new structure. During the COVID-19 pandemic, push payment scams – when criminals use social media and online platforms to bypass bank security measures – have increased, UK Finance said. It added that online companies must be held accountable for their role in the fraud, Law360 reports.
Watchdog agency The Financial Conduct Authority said in its annual report that, for the 12 months up to March, it had reimbursed £161 million for payment fraud, a 40 per cent increase from 2018.
Dedicated Card and Payment Crime Unit Head Detective Chief Inspector Gary Robinson told Law360 that the unit would welcome working more closely with social media and online platforms.
“Recent collaborations with social media and telecommunications companies enabled the DCPCU to successfully take down 731 social media accounts linked to fraudulent activity, of which 258 were involved in recruiting money mules,” he said.
In October, the House of Commons Treasury Committee said that it would investigate the rise of push payment scams that had occurred during the pandemic, as part of its investigation into financial crime.
Have you fallen victim to an online scam? Were you able to get your money back from your bank? Let us know in the comments section!
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