New rules for APP scams - what you need to know

The new rules on APP scams mean that in most cases, you can be reimbursed within five business days of a claim and are covered up to £85,000. However, there are exceptions, and rules apply.

• What is an authorised push payment (APP) scam?
• Are authorised push payment scams a problem?
• What are the new rules for authorised push payment scams?
• What is not covered under the APP scam rules?
• What do the new rules mean for you?
• What should I do if I am an APP scam victim?

What is an authorised push payment (APP) scam?

Authorised Push Payment (APP) scams occur when a scammer deceives you into authorising a bank transfer or payment. The person receiving the payment isn't who you intended to pay, or the payment wasn't for the purpose you originally agreed.

Unlike unauthorised transactions, where a scammer hacks into an account to steal funds, APP scams involve tricking you by exploiting trust or urgency. Here are a few examples of APP scams:

• Purchase scams: These were the most common form of APP scams in 2022, according to UK Finance. A purchase scam occurs when you make payment for goods or services; once payment is received, the scammer disappears, and the goods or services never arrive.
• Impersonation Scams: These involve fraudsters posing as a trusted company or organisation, such as your bank, a government agency, or even a lender you have borrowed from, as with loan scams. Scammers can also pretend to be friends or relatives, using email, SMS, and other methods to con victims.
• Investment Scams: Scammers entice you with the promise of high returns and deceive you into paying for a fake investment or moving money into a fraudulent account.
• Romance Scams: Scammers build a personal or romantic relationship with you, often via social media or dating websites, and then request financial assistance under false pretenses.
• Invoice and CEO Fraud: Invoice and CEO fraud mostly affect businesses, with nearly a third of UK businesses falling victim to invoice fraud, according to Ivalua. Criminals impersonate legitimate suppliers or high-ranking officials of the victim’s organisation, requesting payment, normally to a new or different account.

Previously, some victims of APP scams may have faced challenges in recovering their funds because the payments were "authorised," even though they were made under duress or deceived into doing so. Financial institutions must now follow the new reimbursement rules to address this growing problem.

But just how big is the problem?

Are authorised push payment scams a problem?

In 2022 alone, APP scams accounted for over £485 million in losses in the UK, according to UK Finance. Despite efforts to combat this type of fraud, only 66% of stolen funds were reimbursed to victims. These scams' financial and emotional toll have led to increased scrutiny and regulatory action.

More recently, a BBC report stated there have been over 97,000 cases of APP fraud and total losses of more than £200m in the first half of the year.

So, what are the new APP scam rules?

What are the new rules for authorised push payment scams?

To tackle this issue, the Payment Systems Regulator (PSR) introduced new rules to protect victims of Authorised Push Payment (APP) scams. From 7 October 2024 onwards, firms must reimburse APP scam victims up to £85,000 within five business days (this can vary).

Unlike before, which was a voluntary code, the new rules are compulsory for payment firms. These include high-street bank accounts, building societies, small payment firms, and e-money firms (such as PayPal, Revolut, accounts like Wise and prepaid card accounts).

Here is what is covered by the new rules:

• Authorised Push Payment (APP) Scams
• Payments made within the UK using Faster Payments or CHAPs
• Payments from personal bank accounts (and payments made by micro-enterprises and some charities)
• Payments up to £85,000

Banks and payment firms can charge a £100 excess fee (vulnerable persons must be exempt from paying excesses). The PSR expects most customers to be reimbursed within 5 working days, and firms can still reimburse customers above £85,000 for bigger losses. But there are a few exclusions you need to be aware of.

What is not covered under the APP scam rules?

Here is what is what is not covered by the Authorised Push Payment rules:

• Payment types other than Faster Payments or CHAPS (for example, cards, cash, or cheques)
• Payments outside the UK (such as international payments)
• Payments that result in a dispute, not fraud (for example, you are unsatisfied with a product or service received)
• Payment made to an account you control
• You acted fraudulently or with gross negligence (for example, you ignored warnings from your bank or the police)
• Unlawful payments
• The payment was not reported within 13 months
• Payments made to a credit union, a municipal or national savings bank

What do the new rules mean for you?

The new rules mean it is easier for victims of APP scams to get the money they lost back and offer customers greater protection. However, prevention remains the best defence against APP scams and can save you from a lot of stress.

You must still be cautious and only make payments you know are genuine or safe. Here are a few quick tips:

1. Verify before you pay
   Even if it’s a company or organisation you know or have dealt with, always double-check details. You can contact the company or recipient directly using a trusted phone number to confirm details.
2. Be sceptical of unsolicited contact
   Getting an unexpected communication requesting payment is one way to identify a scam. Fraudsters often succeed with the unsuspecting, and by adding urgency, they often trick victims out of their money.
3. Stop if you’re unsure
   If you’re unsure or suspicious, stop and talk to a trusted friend or family member before making the payment.

What should I do if I am an APP scam victim?

Report it immediately to your account provider. Your account provider will advise and assist you with your claim and guide you through the next steps, including reporting the details to the police. Of cause, if you are unhappy with how your provider has dealt with the matter, you can raise the matter with the Financial Ombudsman Service.

If you have been a victim of fraud in the past, always keep an eye on your account for any additional suspicious activity. You should access your credit report regularly and check it for hard searches and other signs of attempts to take out credit in your name.

In conclusion

The introduction of new rules for Authorised Push Payment (APP) scams marks a significant step forward in protecting consumers from the growing threat of financial fraud. With compulsory reimbursements of up to £85,000, victims can recover losses more easily, reducing the financial and emotional toll.

However, it’s essential to remember that prevention is still your best defence. By verifying payment details, staying alert to unsolicited contact, and pausing to double-check before authorising payments, you can reduce your risk of falling victim to APP scams. The additional protections are a safety net, not a substitute for caution.