CTSI Warns New Fraud Repayment Rules May Leave Victims Struggling
New rules introduced in the UK today aimed at refunding victims of authorized push payment (APP) scams may still leave many without full compensation, according to a non-profit organization.
The UK Chartered Trading Standards Institute (CTSI), focused on consumer protection, warned that the cap on the Mandatory APP Reimbursement Scheme is set too low. The Payment Systems Regulator (PSR) announced on September 25 that it would reduce the maximum reimbursement from ￡415,000 ($542,400) to ￡85,000 ($111,100).
The PSR defended the decision, claiming that the lower cap would still cover over 99% of APP fraud claims. However, the CTSI argued that the reduction, which followed intense lobbying from some parts of the payment industry, would negatively impact victims of large-scale scams like investment and property fraud.
The National Trading Standards (NTS) Scams Team estimates that fraud costs UK consumers between ￡5-10 billion ($6.5-13 billion) annually. While victims can seek further compensation through the Financial Ombudsman Service (FOS) if their bank rejects their claim, the CTSI cautioned that this process would add more stress to those already traumatized by fraud.
The CTSI has urged the PSR to reinstate the original cap after a planned 12-month review.
According to UK Finance, APP fraud losses reached nearly ￡460 million ($600 million) in 2023, with 62% of that amount returned to victims. They reported that 76% of these scams originated online, and 16% came from telecommunications, which accounted for 43% of total losses.
Meanwhile, Meta recently extended an information-sharing pilot with UK banks, after successfully removing 20,000 fraudulent accounts involved in a major concert ticket scam targeting users in the US and UK.
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