More bank fraud victims to be refunded

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Banks will start refunding victims of so-called ‘ authorised push payment ‘fraud’ under a voluntary code. The code comes into force from May 28th. What will change?

What happens now

Banks often don’t refund people who’ve unwittingly authorised a payment to a scammer. These authorised push payment frauds occur when a fraudster convinces someone that they’re a genuine supplier (such as a solicitor, computer help specialist, builder or trader) or that they can help you avoid fraud on your account. Banks have taken the view that because the customer has authorised the payment, they and not the bank should bear the loss. This is the case even when the customer has been convinced by a very plausible fraudster to make the payment.

It has to be said that banks have repaid some victims of these frauds, and some banks are definitely better than others and take a more compassionate view. However, it’s been quite hit and miss up until now.

What’s changing?

From May 28th, banks that sign up to the voluntary code will commit to:

  • protecting their customers from authorised push payment fraud. They’ll have to make sure they have procedures in place to detect and prevent this fraud. If customers are identified as vulnerable, the bank will have to have more protection in place.
  • preventing accounts from being used to launder the proceeds of advanced push payment fraud. One of the problems at the moment is that once the fraudster has stolen the money, they clear out the account they pay the stolen money into very quickly. In the past banks that have processed this stolen money have been reluctant or unable to help fraud victims.

Importantly, where neither the bank nor the customer is to blame for the fraud, the bank will refund the customer.

Will all banks do this?

No. The code is voluntary so only banks that have signed up to the code by May 28th will commit to offering these refunds. The banks that have signed up to the code will be announced on May 28th.

Related articles:

Four banking frauds and scams to avoid – how to reduce the risks of being a fraud victim

Mobile banking; tips on how to bank safely

Getting a refund from your credit or debit card through ‘chargeback’

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