The new APP fraud rules: What they mean for consumers, fraudsters and the UK
The Payments Association, the most influential community in payments, and We Fight Fraud, an organisation that focuses on tackling financial crime, and supported by Cardaq, has released an investigative documentary exploring the potential impact of new authorised push payments (APP) legislation on consumers. It is also, crucially for the first time, exploring the new rules through the eyes of the criminal and how easily they will exploit them for their own ill-gotten gains.
‘The New APP Rules: What They Mean for Consumers, Fraudsters and the UK,’ is a groundbreaking documentary that conveys the human story of what the changes will mean when the UK’s Payments Systems Regulator’s (PSR) rules enter into force on October 7th.
It includes interviews with stakeholders, key experts, including directly from the PSR and, crucially, with an active criminal and a victim who was caught by a phishing scam. These insights provide a clear picture into what the proposed changes mean and how effective those that have committed fraud view the change and explores how they might further exploit the loophole.
The release of this investigation follows the PSR’s recent backtrack on its initial recommendation of an upper threshold to be paid back to fraud victims, agreeing to a consultation that will likely lower the sum from £415,000 to £85,000. At the time, The Payments Association praised the regulator for seeing the societal benefit of this change and listening to the payments sector regarding its concerns, while stating its intention to continue to push for a threshold of £30,000.
At the time of publication, the deadline for responses to the consultation has passed. The Payments Association is still pushing for an upper limit of £30,000 for mandatory reimbursement. Every other case beyond this threshold amount, which amounts to 5% of all cases, should be properly investigated before proceeding any further. We will also continue to advocate for alignment on the definition of the consumer standard of care to the interpretation of gross negligence normally applied by British Courts, social media involvement and a six-month review of the rules’ impact since their implementation.
Riccardo Tordera, Director of Policy and Government Relations, The Payments Association, said: “This documentary shines a much-needed light on the unintended consequences of the PSR’s new anti-APP fraud measure that will still affect consumers, albeit the threshold is likely to be reduced from £415,000 to £85,000.”
“Scrapping fraud at its source is the most powerful way to ensure consumers don’t fall victim to fraud. At present, the PSR only proposes to lower the threshold to £85,000. This is not enough to ensure robust consumer protection. There is no mention of modifying the definition of the consumer standard of care and align it with the interpretation that British courts give of gross negligence. Nor we can be satisfied with this new threshold which is still too high and will fail to address unintended consequences. Further, the current rules lack a legal mandate to involve social media platforms where most of scams originate from. We need to see measures in place that will effectively discourage criminals from defrauding business and individuals. They are the enemy, not the industry. We will only make it easier for the system to be taken advantage of, as the documentary clearly shows.”
“With less than a month left to the October 7th implementation date, our demand to the PSR hasn’t changed. The proposed decrease in the threshold to £85,000 is positive, but £30,000 is what we will still hope we can see coming. This covers 95% of cases by number of claims and the only thing we ask is that for the remaining 5% a proper investigation comes in before mandating payout. The measures as they stand do little or nothing to discourage unintended consequences, such as moral hazard and a rapid increase of first party fraud.”
Dr Nicola Harding, Chief Executive Officer, We Fight Fraud, said: “Fraud and financial crime devastates lives and businesses. Therefore, we welcome all initiatives that endeavour to reduce the harm felt by financial crime, for victims of fraud, the broader economy, and society as a whole. This documentary shows, is that every action has (sometimes unintended) consequences.”
“To build a stronger financial system that responds to the needs of consumers now and in the future, we need to fully understand all of the risks and work together to combat them. This groundbreaking work undertaken by We Fight Fraud and The Payments Association, kindly supported by Cardaq, should be the starting point for game changing conversations that can utilise this unique view from all stake holders – including both victims and the criminal threat.”
“In devising strategy in the fight against fraud we should not forget who we are fighting for. Fraud costs us all. It is all of our responsibility to try and reduce any opportunity that criminals will take advantage of.”
Hugo Remi Chief Executive Officer of Cardaq, said: “The documentary critically examines the rapidly evolving landscape of APP (Authorised Push Payment) fraud, a pressing and complex challenge. As fraud schemes become more sophisticated, the importance of staying vigilant cannot be overstated. It’s not just about keeping pace with the latest tactics but also understanding how fraudsters adapt to exploit vulnerabilities within businesses, customers, and, most importantly, end consumers.”
“At Cardaq, we are deeply committed to leveraging cutting-edge innovations to protect both consumers and businesses. Our involvement in this project allows us to contribute to the broader conversation about the future of financial security and the proactive steps the industry must take to stay ahead of these ever-growing threats.”
To watch the documentary investigation in full, please visit: https://youtu.be/vjC2rNKGM0k
For more information on the work and services of The Payments Association you can visit https://thepaymentsassociation.org/ or contact [email protected]
Media contact
Ian Donegan, SkyParlour for The Payments Association
+44 (0)330 043 1315
