PSR publishes latest APP scams performance report for 2023
Reimbursement rates increased, while fraud value decreased.
In 2023 victims reported 252,626 cases of APP scams totalling almost £341m.
Reimbursement for victims still depends largely on who they bank with.
LONDON, UNITED KINGDOM / ACCESSWIRE / August 1, 2024 / Latest figures released today by the Payment Systems Regulator (PSR) track the performance of payment firms in tackling Authorised Push Payment (APP) scams and reimbursing victims in 2023.
APP fraud performance reporting:
In its second annual report, the PSR presents data on three key areas:
Reimbursement to victims (from the largest 14 banking groups in Great Britain and Northern Ireland)
How much money is sent from victims' accounts by each payment firm as a result of APP scams (from the largest 14 banking groups in Great Britain and Northern Ireland)
How much money is received into fraudsters' accounts by each payment firm as a result of APP scams (covering scams sent from accounts held with the 14 largest banking groups in Great Britain and Northern Ireland to any UK payment firm)
In 2023, 4.5 billion transactions were made using the Faster Payments system. In the same year, victims reported 252,626 cases of APP scams totalling almost £341m and today's report shows that reimbursement for victims still depends in large part on which bank they use.
The findings include the UK's 14 largest banking groups, along with the data for eleven other smaller firms that were in the top 20 highest receivers of fraud. The smaller firms are included as they represent a disproportionately high level of fraud received.
David Geale, Managing Director of the PSR, said:
"Today's report highlights how payment firms tackled APP scams and the way they treated those who fell victim in 2023. We can see some positive changes with more victims being reimbursed than in 2022. But there is still more to do - particularly for some smaller firms which have much higher rates of receiving fraud than larger firms.
"Our new mandatory reimbursement measures will dramatically increase protection for consumers. These come into effect on 7 October 2024, and we are already seeing payment firms innovating and improving their controls, which is key to preventing scams from happening in the first place."
On reimbursements:
The report shows the percentage of APP scam cases that were fully and partially reimbursed by each firm. Under the existing voluntary reimbursement framework, 67% of money lost to APP scams was reimbursed. While this has improved between 2022 (61%) and 2023 (67%), there is still an inconsistent approach by firms when it comes to reimbursing victims. Currently, only the sending firm makes any reimbursement, ignoring the vital role receiving firms play in preventing scammers from accessing the UK's payments systems.
By volume of cases (where there was full reimbursement):
Nationwide fully reimbursed 96% of the APP scam cases reported to it, followed by TSB which fully reimbursed 95% of cases and Barclays which fully reimbursed in 82% of cases.
Only 3% of cases reported to AIB were fully reimbursed, while Danske Bank fully reimbursed 7%, and Monzo fully reimbursed 9%.
By value of APP losses:
TSB reimbursed 88% of APP scam losses to customers in 2023. Nationwide reimbursed 87% and HSBC reimbursed 76% of APP scam losses.
AIB Group reimbursed 9% of APP scam losses. Danske Bank reimbursed 13% of APP scam losses. Monzo reimbursed 17% of APP scam losses.
On banks sending fraudulent payments:
The report shows how much money customers at the 14 largest banking groups lost to APP scams for every million pounds they sent and how many APP scam payments there were per million transactions sent.
For every £1 million both Metro Bank and TSB customers sent in 2023, £266 of that was lost to APP scams. For Lloyds, Bank of Scotland and Halifax customers that is £228 per £1 million lost to APP scams, and for Nationwide customers that is £219 per £1 million lost to APP scams..
For every 1 million transactions made in 2023 by Metro customers, 137 were reported as APP scams. For Monzo customers, 131 transactions in every million were reported as APP scams and for Nationwide, for every 1 million transactions made 129 were reported as APP scams. In contrast, for every 1 million transactions made by The Co-operative Bank customers, 51 were reported as APP scams.
On banks that hold accounts receiving fraudulent payments:
The report shows which banks and payment firms held accounts that received the highest value of APP scams per million pounds of transactions and the highest number of APP scam payments per million transactions received:
Typically, smaller firms receive disproportionately higher rates of APP scams compared to the 14 largest banking groups in Great Britain and Northern Ireland. For example, for every £1 million received into Skrill's accounts in 2023, £18,550 was of it was from APP scams.
Whereas with the larger, more established firms, the report shows that for every £1 million received into TSB accounts in 2023, £408 of it was from APP scams. For Metro, for every £1 million received, £319 of it was APP scams. Clydesdale Virgin Money was £285 in every £1 million, and for every £1 million received at a Starling account, £237 was from an APP scam. In contrast, for every £1 million received by Santander accounts, £41 was from APP scams.
There is a similar pattern in relation to the volume of payments. For every 1 million transactions received into PayrNet, 2,705 were APP scam payments. For every 1 million transactions received into Metro Bank in 2023, 122 were APP scam payments. At Starling it was 114 for every 1 million transactions and Clydesdale/Virgin Money, every 78 for 1 million transactions derived from APP scams. In comparison, 33 in every 1 million payments at Santander and 35 in every 1 million at Barclays were subject to APP scams.
What the report tells us:
Today's report shows the performance of payment firms in 2023, prior to any regulatory requirements that will come into effect on 7 October 2024. In anticipation of those requirements, the report also shows that the total number of reported APP scam cases has reduced. This could suggest the actions taken by payment firms to detect and prevent fraud are starting to make a positive difference. The PSR will continue to monitor progress as its requirements come into effect.
As in 2022, there continued to be inconsistent outcomes for customers who reported an APP scam to their bank or building society. For example, some automatically reimburse in full, others may only make a partial reimbursement leaving victims to bear part of the loss, and others will only accept claims subject to very narrow circumstances.
Overall, there has been an improvement in consumer outcomes as reimbursement by value has increased from 61% in 2022 to 67% in 2023. These results are largely driven by members of the Contingent Reimbursement Model (CRM) which is a voluntary code that sets guidelines on how firms reimburse victims of APP scams. CRM members reimbursed 68% of the fraud value back to consumers in 2023.
There are a small number of firms who receive a disproportionately high number of scams relative to their size.
Payment firms that the PSR directed will be required to publish this information on their websites within 20 days of today's publication which will give consumers greater transparency about how they deal with APP scams.
The PSR continues to work with the FCA to identify where action is needed and will set out plans for payment firms to make necessary improvements.
The regulator has also collected data which shows where APP scams originate. Later in 2024, the PSR will publish this data to raise awareness about the different ways fraudsters can target victims, such as through social media platforms.
ENDS.
Notes and background information:
Use of Faster Payments has increased year on year, with 4.5 billion transactions totalling £3.7 trillion reported in 2023.
The proportion of Faster Payments transactions received by firms outside the largest 14 banks has increased by 2% since 2022.
APP scam transactions make up 0.009% of Faster Payments transactions by volume.
While the volume of sending APP scams has increased by 12% since 2022, the total value of APP scams reduced by 12% to £340.65 million in 2023.
Our data shows victims reported APP scams totalling £340.65m across Faster Payments for 2023. The UK Finance annual fraud report, reports authorised losses of £380.2m across Faster Payments for 2023. We have accounted for the difference by:
UK Finance's report uses data submitted by 34 UK Finance members, while our report uses data from 14 directed firms.
UK Finance's report aggregates the data, whereas our report names individual firms. Our process also includes a 'challenge' process where receiving firms can go back to sending firms to query the data, this does result in some of the data originally reported no longer being classified as an APP scam. As firms are not named in the UK Finance report, and with no equivalent 'challenge' process it is more likely to result in higher fraud figures being reported.
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SOURCE: Payment Systems Regulator