APP Scams Voluntary Code: interim funding for scam victim compensation to continue to 31 December 2020

The interim funding arrangement to pay compensation to victims of authorised push payment (APP) scams in situations where both the customer and their bank have met the standards expected of them under the APP scams voluntary Code is being extended to 31 December 2020.

The payment service providers (PSPs) who have provided the interim funding since the Code launched on 28 May 2019 have agreed to continue doing so until the end of this year to allow more time for regulators, government and industry to deliver a long-term, sustainable funding arrangement.

The Code provides new consumer protections against authorised push payment fraud, with signatory PSPs committing to reimbursing the victims of this type of fraud, provided the customer has met the standards expected of them under the Code.

In situations where both the victim who lost money and their bank have met the required standards set out in the Code the customer of the Code signatory bank will still receive compensation for the money lost, with the PSP subsequently claiming the money from the interim fund.

Stephen Jones, Chief Executive of UK Finance said:

"The banking and payments industry is committed to defending their customers from fraud and stopping stolen money from going to criminals. The APP scams voluntary Code has set stronger standards for payment service providers to help protect customers; however there is a responsibility on all industries, not just banking and payment providers, to do more to stop these criminals from being able to target customers.

?There is strong agreement across our sector that the development of any sustainable funding solution to compensate victims of scams must also include those third-party organisations whose data and platforms are used by criminals to facilitate fraud. The agreement to continue the interim funding arrangements until the end of this year gives important time for this to be agreed and implemented.

?We share the views expressed by the Treasury Committee and Which? that issues of liability and reimbursement should best be addressed by new laws rather than just a voluntary Code alone.?

Notes to editor

For more information please call the UK Finance press office on 020 7416 6750 or email <a href="mailto:press@ukfinance.org.uk">press@ukfinance.org.uk</a>
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UK Finance is the collective voice for the banking and finance industry. Representing more than 250 firms across the industry, we act to enhance competitiveness, support customers and facilitate innovation.</li>
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Nine financial institutions, representing 19 brands, are signatories to the authorised push payments scams voluntary Code:</li>
</ol> Barclays Bank UK PLC
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Barclays</li>
</ul> The Co-operative Bank plc
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Co-op</li>
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Smile</li>
</ul> HSBC Bank plc
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HSBC</li>
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First Direct</li>
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M&S Bank</li>
</ul> Lloyds Banking Group
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Lloyds Bank plc</li>
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Halifax</li>
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Bank of Scotland plc</li>
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Intelligent Finance</li>
</ul> Metro Bank plc
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Metro Bank</li>
</ul> National Westminster Bank Plc
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Royal Bank of Scotland plc</li>
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National Westminster Bank Plc</li>
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Ulster Bank (Northern Ireland)</li>
</ul> Nationwide Building Society
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Nationwide</li>
</ul> Santander UK plc
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Santander</li>
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Cahoot</li>
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Cater Allen Limited</li>
</ul> Starling Bank
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Starling</li>
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Authorised push payment (APP) scams are when customers are tricked into authorising a payment to an account that they believe belongs to a legitimate payee ? but is in fact controlled by a criminal.</li>
</ol> APPs are made at the request of the customer and can be carried out over the phone, online, or in person. Consumers lost £208 million to APP scams in the first half of 2019, as a result of being tricked into authorising a payment to an account controlled by a criminal or purchasing goods from fake or unofficial sources.
 The authorised push payments scams voluntary Code sets out increased consumer protection standards which will help reduce the occurrence of APP scams. To help protect customers, payment service providers that have signed up to the Code commit to:
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protect their customers with procedures to detect, prevent and respond to APP scams, providing a greater level of protection for customers considered to be vulnerable to this type of fraud; and</li>
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greater prevention of accounts being used to launder the proceeds of APP scams, including procedures to prevent, detect and respond to the receipt of funds from this type of fraud.</li>
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Importantly, any customer of a bank or payment service provider (PSP) which is signed up to the Code will be fully reimbursed if they fall victim to an APP scam, provided they did everything expected of them under the Code.</li>
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Under the terms of the Code in situations where both the customer and their payment service provider meet the required standards set out in the Code, a customer of a firm signed up to the Code who falls victim to APP fraud will still receive their money back. This is often referred to as a ?no blame? situation.
 Today, the seven launch signatories who have provided interim funding in these situations under the Code have agreed to continue the funding deadline to 31 December 2020 while the industry, regulators and government continue to discuss and agree the long-term funding solution. They are:</li>
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Barclays</li>
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HSBC</li>
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Lloyds Banking Group</li>
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Metro Bank</li>
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Nationwide</li>
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RBS</li>
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Santander</li>
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The finance industry is committed to tackling fraud and scams by:</li>
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Investing in advanced security systems to protect customers, including real-time transaction analysis, behavioural biometrics on devices and technology to identify the different sound tones that every phone has and the environment that they are in.</li>
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Delivering the Banking Protocol ? a ground-breaking rapid response scheme through which branch staff can alert police and Trading Standards to suspected frauds taking place. The system is operational in every police force area and prevented £23.2 million in fraud and enabled 134 arrests in the first half of 2019.</li>
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Sponsoring a specialist police unit, the Dedicated Card and Payment Crime Unit (DCPCU), which tackles the organised criminal groups responsible for financial fraud and scams. In the first half of 2019, the unit prevented an estimated £6.8 million of fraud, secured 39 convictions and disrupted 13 organised crime groups.</li>
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Helping customers stay safe from fraud and spot the signs of a scam through the Take Five to Stop Fraud campaign.</li>
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Hosting and part-funding the government-led programme to reform the system of economic crime information sharing, known in the industry as Suspicious Activity Reports, so that it meets the needs of crime agencies, regulators, consumers and businesses.</li>
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