??PS24/7 APP Scams Reimbursement: How Vulnerability Analytics Can Drive Better Outcomes ??

Authorised Push Payment (APP) scams are a growing challenge for both consumers and financial institutions. These scams trick individuals into authorising payments under false pretences, resulting in substantial financial losses. To protect consumers, the Payment Systems Regulator (PSR) introduced the PS24/7 Faster Payments APP scams reimbursement requirement, which came into effect last month.

This regulation mandates firms to reimburse victims (up to a maximum value of ￡85,000 per claim), provided specific conditions are met. It marks a fundamental shift in accountability - from relying on customers to prove their innocence and firms adhering to voluntary codes, such as the Contingent Reimbursement Model, to a regime of enforced compliance, ensuring consistency and fairness across the industry.

The Financial Impact for Firms

This regulation introduces significant financial implications as firms are now required to reimburse 99.8% of unauthorised transactions.

Failure to comply could result in:

?? Regulatory fines

?? Customer trust issues

?? Financial losses?

Non-compliance may also lead to long-term financial penalties and strained customer relationships, creating a ripple effect of operational and reputational risks.

Reimbursement Policy and Vulnerable Customers

The policy is particularly significant for protecting vulnerable customers. Under the new regulation, firms must ensure that reimbursement decisions are fair and take into account the unique vulnerabilities of each individual.

How Does Consumer Vulnerability Affect Scam Outcomes?

Consumers with characteristics of vulnerability may be more likely to fall victim to scams, placing them at a greater risk of harm. In addition to the new requirements, The FCA’s Guidance on the Fair Treatment of Vulnerable Customers advises firms to consider both consumers’ vulnerability and their capacity to make decisions when determining how to treat victims of scams or fraud.

These vulnerabilities may include:

• Increased trust in scammers, especially when they exploit emotional or financial stress.
• Limited digital literacy, reducing awareness of scam warning signs.
• Diminished capacity for critical decision-making due to health, financial, or emotional challenges.

Scammers often exploit these factors, making it crucial for firms to adopt a proactive approach to identifying and supporting vulnerable customers.

Key Considerations for Vulnerable Customers

• Fair Assessment of Responsibility: Firms cannot deny reimbursement based solely on customer error if vulnerability factors contributed to the situation.
• Proactive Identification and Support: Early detection of vulnerabilities helps reduce the likelihood of harm.
• Tailored Reimbursement Processes: Simplified claims procedures and clear communication ensure vulnerable customers are treated fairly and equitably.

How Does Insight Into Consumer Vulnerability Bring Value to Scam Detection and Prevention?

Understanding customer vulnerabilities gives firms a critical edge in scam prevention by enabling:

• Targeted Risk Awareness: Identifying high-risk individuals and focusing fraud prevention measures where they are needed most.
• Proactive Customer Engagement: Educating at-risk customers through tailored outreach, reducing their susceptibility to scams.
• Efficient Resource Allocation: Prioritising efforts and resources for maximum impact.
• Enhanced Customer Trust: Building loyalty and reputation by demonstrating a commitment to protecting vulnerable customers.

?? How Serene Helps Firms Protect Vulnerable Customers and Ensure Compliance

With the PS24/7 Faster Payments APP scams reimbursement requirement in effect, protecting vulnerable customers has become both a compliance obligation and a critical business priority. Serene’s advanced tools empower firms to meet these requirements by providing the foundation for tackling these challenges with:

• Real-Time Detection: Advanced analytics from SereneID flag high-risk individuals for immediate action.
• Risk-Based Segmentation: SereneScore categorises customers by vulnerability level, helping firms focus on those most at risk.
• Streamlined Processes: Automation minimises manual intervention, ensuring swift reimbursement and efficient scam prevention.

By leveraging these capabilities, firms can mitigate penalties, safeguard their reputation, and strengthen customer trust - ensuring no one falls through the cracks.

“With the PS24/7 Faster Payments APP scams reimbursement requirement now in effect, financial institutions face both a challenge and an opportunity: to better protect their customers while meeting compliance obligations. At Serene, we believe proactive vulnerability detection is the key to achieving this. Our solutions are designed to help firms identify at-risk individuals early, including those particularly susceptible to scams.

By equipping firms with real-time insights and automation, we empower them to act swiftly and decisively - reducing financial losses, enhancing compliance, and building trust with their customers.”

Serene is not a traditional fraud prevention tool, but its advanced vulnerability analytics and predictive capabilities make it a powerful fraud-pre-emptive solution!

- Savannah Price, CEO and Founder at Serene

To learn more about how Serene can help your firm meet the PS24/7 Faster Payments APP scams reimbursement requirement, and protect your customers from financial harm, contact us today at [email protected]