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Insights and Expertise
A view from the UK: Once sent, these funds are typically gone for good, with
little recourse.
APP, where are we According to UK Finance, UK losses in 2023 totaled an
alarming £459.7 million, with online platforms responsible
now? for 76 percent of cases. While most digital scams involve
frequent,
phone-based
transactions,
smaller-value
variants, though less common, tend to extract significantly
larger sums from targets.
To address what had long been a regulatory and
reputational sore spot, the Payment Systems Regulator
(PSR) mandated that as of October 2023, both sending and
receiving banks share liability for reimbursing APP fraud
victims. Payouts must be processed within five working
days, up to a cap of £85,000.
The reform was designed to level the playing field and
offer consumer protections in line with the sophistication
of today’s fraud threats. But these changes have not landed
quietly.
Reimbursement gains and industry fallout
The first and most visible outcome of the rule change has
been a marked increase in consumer reimbursements.
More victims are now getting their money back, a clear
By Roger Alexander win for individuals previously left without remedy. But
Chargebacks911 this victory for consumers has brought with it a wave of
resistance from across the financial sector.
t’s been just over nine months since the UK intro-
duced sweeping reforms targeting authorized push Payment firms, especially smaller fintechs and PSPs
payment (APP) fraud, a milestone that offers a handling real-time payments, are warning that the cost
I chance to reflect on the reforms' impact so far. burden imposed by the new liability framework is putting
untenable strain on their businesses.
While it's still too early for a full assessment, the ripple
effects across the payments sphere are already undeniable: A number of providers have already made the difficult
an industry shaped by consumer compensation rules, decision to wind down operations or exit the UK market
rising operational pressure on providers, and changing entirely. One notable casualty, the eco-focused fintech firm
fraud tactics that are testing the limits of prevention for Tred, pointed to the APP fraud rules as a direct factor in
businesses. their closure earlier this year, stating that the new model
made their business unviable.
APP fraud remains one of the fastest-growing financial
crimes. Distinct from other forms of fraud, APP scams Fraudsters adapt, so do banks
involve victims being conned into willingly authorizing Predictably, fraudsters have adjusted swiftly to the new
payments to criminals, usually under misleading regulatory terrain. As liability shifted, the sophistication
fabrications. of scams kept pace. Voice cloning, deepfake scams and
artificial intelligence-driven impersonation attacks are
gaining ground, making it harder than ever for users to
One notable casualty, the eco-focused discern legitimate communication from manipulation.
fintech firm Tred, pointed to the APP This uptick in tech-enhanced fraud presents a major
fraud rules as a direct factor in challenge for fraud prevention teams and further
their closure earlier this year, complicates the job of customer authentication.
stating that the new model made The new environment has also accelerated a broader
conversation about risk allocation. For years, consumers
their business unviable. bore the bulk of APP fraud consequences, often with
limited support. Now, some financial firms argue the
pendulum has swung too far in the other direction.
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