UK bill seeks to protect access to victims of cash and APP fraud
- The UK’s new Financial Services and Markets Bill may provide relief for Authorized Push Payments (APP) fraud victims.
- APP fraud occurs when a criminal defrauds a customer to authorize payment from his bank account to an account under criminal control.
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Read next: The Financial Services and Markets Bill announced in the Queen’s Speech aims to protect access to cash and protect victims of authorized push payment (APP) fraud in the UK.
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More about the bill: The bill is part of a broader plan to maintain and enhance the UK’s position as a global leader in financial services. The bill would be:
Ensure access to withdrawal and deposit facilities across the UK. cash Ruins The primary payment method for millions of people across the country, especially the economically weaker groups.
Allow regulators to demand banks reimburse victims of APP fraud.
Though the bill is yet to be formally introduced, but if it is passed, it will address the growing threat of fraud in the country.
In H1 2021, UK APP fraud losses reach £355.3 million ($488.6 million) increase of 71% from H1 2020.
What is APP fraud? APP fraud occurs when a criminal defrauds a customer to authorize payment from his bank account to an account under criminal control. Typically, the perpetrator spends days or weeks building trust with their victim, then the money disappears once they are in possession.
Legal Responsibilities of Banks for Frauds: Currently, banks are placed on Quincecare duty, which means They must exercise reasonable care and skill in executing customer orders and refrain from executing orders if they have reasonable grounds to suspect that the order is an attempt to misappropriate funds.
The hold-up is that, in most cases of APP fraud, orders come directly from customers who believe that transactions are being made in good faith. After the scam is complete, it’s hard to blame.
Customers claim that their bank must identify the receiving account as fraudulent and prevent it from transacting.
The banks claim that they executed customer orders as directed, and even though the transaction ended in fraud, the orders were not placed fraudulently.
What else can banks do? In the UK, the Lending Standards Board (LSB) set voluntary The practices are followed by nine of the largest UK financial institutions. Recently, LSB updated some of its practices to protect customers from fraud.
Customers are required to verify the identity of outbound payment recipients by providing the recipient’s name and additional bank information.
Banks should clearly explain reimbursement decisions to APP fraud victims.
The big takeaway: Details on the new UK bill have yet to be released, and so it remains to be seen how the bill will affect banks. And the application of Quincecare fee for APP fraud is still not clear. For example, a woman in the UK sued His bank allowed him to authorize the payment of £700,000 ($963,000) from his account in the United Arab Emirates to a fraudster’s account.
The High Court found that Quincecare charges were not extended to cover the payments made by the customer.
The customer appealed, and the Court of Appeals ruled that the bank did not properly enforce Quincecare’s fee.
The bank argued that it would be difficult and time-consuming to impose Quincecare charges on situations in which the customer had given transaction instructions, but the court dismissed that concern as irrelevant.
As technology continues to transform the banking industry, fraudsters are finding new ways to infiltrate banks either directly or through the social engineering of their customers.
Guidance from LSBs may help banks establish controls – but to stop the transaction is too late at the point of payment. Social engineering changes customer behavior well in advance of a transaction.
In order to change the behavior of their customers, banks should educate them about the safety of their assets and raise awareness about potential fraud situations.
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