Stopping Scammers, Tackling Fraud: All Eyes on the UK
Abstract
Read this Report to Learn About:
- New mandates for banks in the UK to reimburse victims of scams (Authorised Push Payment fraud);
- How the industry is preparing to deal with new requirements, including selected examples of available vendor offerings;
- Which other countries are considering similar regulations, and key similarities and differences to their approaches;
- Celent's scambusters' flywheel: what banks and other players must do to stop scammers and tackle fraud.
Authorised Push Payment (APP) fraud – when fraudsters trick people into willingly sending money to the account under their control – is a growing problem in many parts of the world. As a country with one of the first real time payment networks, the UK has been at the front lines in battling this problem for some time now. Still, the UK APP losses stood at £460 million in 2023, and the number of individual cases continues to grow. Furthermore, APP scams performance varies widely among the banks and other institutions licensed to provide payment services, and the voluntary agreement to reimburse fraud victims has failed to deliver consistent outcomes for customers.
Now, in a move that is the world’s first, the Payment Systems Regulator (PSR) mandated banks and other payment service providers (PSPs) to reimburse scam victims, with the sending and receiving banks sharing the reimbursement costs 50-50%. The new rules came into effect on October 7th, 2024; the report provides all the details of the new requirements.
Not surprisingly, all eyes are on the UK: Other countries are watching with interest if the regulation will have a desired effect. Many other jurisdictions – from the US and EU to Australia and Singapore – are considering or introducing their own interventions. While all aim to offer increased protections to consumers, the approaches vary in terms of scope (e.g., type of scams covered), reach (e.g., banks-only or also other industries), and the requirements (e.g., reimbursement vs penalties).
While the need to prevent scams is not new, the new mandates bring an even sharper focus to the problem and require banks and other players to step up their efforts. In a dedicated section of the report, Celent reviews selected vendor and industry solutions to help banks manage fraud, as well as other efforts from banks and broader industry players to help prevent scams.
Celent concludes that no one can win this battle alone: players across industries must invest and collaborate to set the scambusters’ flywheel in motion. Concerted efforts to stop scams at source will make it easier for individual banks to manage fraud and reimbursement claims, while increased sharing data and collaboration will further help stop scams at source and improve fraud and mule detection models.
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