Major UK-based lenders have agreed to compensate customers who fall victim to authorised push payment (APP) scams.
An industry voluntary code developed by the APP Scams Steering Group has become effective to protect customer-interests in the event of fraud.
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Initially, eight banks representing 17 consumer brands have signed up to the effort. They include Barclays, HSBC, Lloyds, RBS, Santander, Metro Bank, Nationwide and Starling Bank.
What is a APP scam?
APP scams are those where a customer is tricked to authorise a payment to an account belonging a fraudster. The victim often falls prey to this scam believing that the scammer-controlled account belongs to a legitimate payee.
According to UK Finance data, consumers lost around £228.4m last year due to APP scams.
The new voluntary code aims to bolster consumer protection standards to reduce the occurrence of these scams.
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By GlobalDataMembers that have signed up for the code committed to protect their customers through procedures to detect such APP scams. They will also work to prevent customer accounts to launder the proceeds procured from the frauds.
Additionally, the banks will step up their responses to the receipt of funds from this type of scams.
Most importantly, the customers of these banks will be fully compensated, when they fall victim to an APP scam. Customers will be eligible for reimbursement only if they did everything as expected from them under the new code.
APP Scams Steering Group independent chair Ruth Evans said: “Today marks a watershed in delivering increased protections for consumers from authorised push payment scams.
“For the first time, any victim who is a customer of a signatory firm will be fully refunded, as long as they meet the standards expected of them.
“For far too long these scams have caused havoc to consumers’ lives. They can have a devastating impact, causing hardship and distress to victims that can lose anything from a few pounds, to the whole of their life’s savings.”
