Mandatory refund among proposals to crack down on UK payment scams


PSR offers the 12 largest payment service provider (PSP) groups in Britain, which include most of the UK’s High Street retail banking brands, as well as Northern Ireland’s two largest PSPs in outside of these PSP groups, will have to publish comparative data data on the levels of APP scams, the reimbursement levels of their customers who are victims of APP scams and the accounts of PSPs that receive the fraudulent payments.

Mila Pencheva, Financial Services Expert at Pinsent Masons, said: “We expect this to be data that designated PSPs are already monitoring and collecting. However, putting this data in the format expected by the PSR and ensuring that it fully covers the proposed metrics will likely require some operational effort on the part of PSPs ”.

“PSPs explicitly targeted by the proposals should already assess the changes they need to make to their data collection processes, as well as the associated costs, to comply with the proposals. Arguably, all PSPs should consider whether they should start collecting the proposed data metrics both to ensure proper protection of their customers and to anticipate any potential future expansion of management scope ”, a- she declared.

The PSR also recommended to make compulsory the reimbursement of the victims of fraud to the APP. This would require legislative changes which, according to the PSR consultation announcement, are on the agenda of the British Treasury.

“Making reimbursement compulsory for victims of scams would be revolutionary for the industry, but could be costly for PSPs,” said Barber. “The proposals will likely force PSPs to provide increased payments and put in place complex systems and processes to comply with the new rules. These changes may have a disproportionate impact on small PSPs, but users of those PSPs should also be afforded the same protections in order to create a level playing field..

David Crossan, an APP fraud litigation expert, said, “Another concern is whether this is creating a new kind of APP fraud through the back door. We have acted on a number of claims where the potential claimant is suspected of playing a role in the fraud, even passively or in a very minor way. The checks and balances on mandatory reimbursement will be essential to ensure that PSPs can always defend themselves again against claims where there is a question mark as to the suitability of the claimant’s conduct and how this will be assessed.

PSR said it would task the financial services industry to improve information sharing among payment service providers (PSPs) to improve fraud prevention.

In addition to the three main proposals in the consultation document, the PSR said it would also explore the balance of responsibilities between sending and receiving PSPs, and develop proposals on how it could use its existing powers to solve any problem.

The regulator will examine the value of voluntary action by PSPs and facilitate industry coordination to bring together voluntary efforts.

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