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 is TSB doing?
Today (April 15th), TSB announced that from yesterday, it would refund its customers who are defrauded. The bank will pay them back if money was taken fraudulently (as banks have to do currently) and if they were tricked into paying a thief who they thought was genuine. It launched its Fraud Refund Guarantee, which TSB says will pay out if customers contact the bank on 0800 096 8669 (or on the number on their card):
- TSB will still investigate the fraud claim, including what happened and how it happened. TSB says this is so it can tell the customer and ensure they’re protected from future fraud.
- TSB will not repay losses due to fraud committed by an individual on their own account. Customers who abuse the Fraud Refund Guarantee, for example by repeatedly ignoring account safety advice, may not get money refunded in the future.
- TSB will not refund losses for retrospective claims; the Fraud Refund Guarantee applies to fraud losses incurred on or after Sunday 14 April 2019.
- The guarantee covers authorised and unauthorised transactions for claims meeting the criteria. For authorised transactions the guarantee is limited to £1 million for each claim.
- The fraud guarantee will also cover any new customers joining TSB from 14th April.
What are other banks doing?
At the moment, no other bank offers this type of guarantee. But from May 28th, banks that sign up to the voluntary code will commit to refunding customers who’ve had money stolen. TSB says that the code doesn’t go as far its own Fraud Refund Guarantee. TSB says that its own refund guarantee will pay out in these situations:
- If a customer has been socially engineered into resetting their login details or withdrawing money from a branch and handing it over to fraudsters.
- If a customer’s account has been taken over after they gave access away to a fraudster without realising.
- If a customer has been negligent and handed over memorable information to the fraudster.
- In cases of push payments, where warnings are displayed to the customer but they authorised the payment regardless, they will get a refund.
TSB says that the four situations outlined above are not covered by the banks voluntary code to refund customers. What banks say they will do, from May 28th is:
- Protect 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.
- Prevent 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.
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