New Rules Require Banks to Reimburse Fraud Victims

Banks Now Required to Reimburse Fraud Victims Under New Rules

From the 7 October, banks are now required to reimburse victims of authorised push payment (APP) fraud, covering up to £85,000 unless the customer has been grossly negligent. Previously, refunds were inconsistent, relying on a voluntary code, but these new rules aim to ensure most victims are treated fairly. The rules cover UK bank transfers, with some banks potentially reimbursing more than £85,000 on a case-by-case basis. If a victim loses more and isn’t fully compensated, they can file a claim with the Financial Ombudsman Service (FOS), which has a higher compensation limit of £430,000.

Banks’ Efforts to Fight Fraud

Banks have been actively calling for stronger cross-sector cooperation to tackle fraud. According to Ben Donaldson, Managing Director of economic crime at UK Finance, most fraud originates from social media and telecommunications networks, where criminals engage in psychological manipulation. He emphasises that banks are doing more than any other sector to combat fraud but that greater collaboration with online platforms and telecoms companies is essential.

To further combat fraud, the Government has proposed laws to allow banks an additional 72 hours to delay payments they suspect may be fraudulent. Currently, banks must process or block payments by the end of the next business day. While this change is aimed at reducing fraud, there are concerns that mandatory reimbursement rules could lead to an increase in “complicit” fraud, where individuals willingly participate in scams to claim refunds.

How to Keep Your Money Safe

While the new rules offer stronger protections, customers are urged to stay vigilant. Criminals often exploit major events to make their scams more convincing. For instance, Lloyds Bank estimated that fraudsters posing as ticket sellers for Taylor Swift concerts could have scammed over £1 million from UK residents.

Concerns are also growing that advancements in artificial intelligence (AI) will make scams, such as fake emails and phone calls, harder to detect. However, AI is also being harnessed to fight fraud. On Monday, not-for-profit group Get Safe Online launched Ask Silver, a tool powered by AI that allows users to upload screenshots of suspicious texts, emails, or websites. The tool then flags whether the communication is likely fraudulent. As Ask Silver founder Alex Somervell explains, this tool is designed to help people live, shop, and buy online without fear in an era of increasingly sophisticated scams.