The story so far: A snapshot of what we’ve seen since our APP scams reimbursement requirement went live

Managing Director David Geale reflects on what we have seen since implementation of the world leading reimbursement requirements to protect users.

Our new authorised push payment (APP) scams reimbursement requirement went live on 7 October 2024. It gave stronger protections to victims of APP scams in a way no other country had done before.

We’re now just over seven months in and we’re looking back at how payment service providers (PSPs) implemented the policy, and the impact it’s had on people so far.

As with any new policy, implementation can be challenging as firms train staff and roll out the policy to consumers. We are pleased with what we’ve seen in the data and heard from stakeholders in the first few months, which demonstrates that the policy has been successfully implemented – and more consumers have been protected.

This is testament to the efforts of industry to deliver the best outcomes for victims of APP scams and work with us to resolve any issues.

Most importantly, the policy is having an impact and we’re seeing positive results. A high proportion of APP scam victims are being reimbursed consistently across a larger number of PSPs. And while it is too early to draw firm conclusions based on the period covered by this data, we have not seen evidence of spikes in claim volumes that some had feared would occur under the policy.

Additionally, now that both parties in the payment journey (the sending PSP and the receiving PSP) share the cost of reimbursing victims, there is a much stronger incentive for all PSPs to prevent APP scams from occurring in the first place. We are pleased to see PSPs starting to collaborate more in the effort to fight this fraud.

It is still early days – and we are continuing to refine the data we are receiving, but I wanted to share with you some key findings from data covering the first three months of the policy.

For transparency, some data notes at the end explain the data we have used. It’s important to note that this data covers only UK payments made over the Faster Payments system from the start of the reimbursement policy (7 October 2024) up until the end of 2024. Although we have referred to more recent industry data in other forums, the data we use here is official compliance data reported by the PSPs to Pay.UK.

We must never forget that this is about protecting real people from the emotional and financial consequences of having their money stolen – that must remain our strong focus and why we have included some of their stories in this blog. To keep victims anonymous, we have changed all identifiable characteristics in these case studies.

What we found

1. Reimbursement rates for victims are high, and vulnerable consumers are better protected

The data indicates that reimbursement rates for APP scams that are in scope of our policy are high. In the first three months, 86% of money lost to APP scams was returned to victims, totalling around £27m.

Although it’s not possible to make direct comparisons with data from before our policy due to methodology changes (particularly the definition of an APP scam), we note that reimbursement for consumers in 2023 was 68% (by value), as per UK Finance’s Annual Fraud Report 2024 data.

We have also seen the additional protections for the most vulnerable consumers working. Over that period, 14% of total APP scam claims were made by consumers with a vulnerability, equating to £7m.

2. Levelling the playing field

More payment firms are now reimbursing victims of APP scams than before.

Before our policy came into effect, whether an APP scam victim was reimbursed wasn’t consistent across firms. Customers of 10 firms that were signatories of the voluntary Contingent Reimbursement Model Code (CRM code) were much more likely to be reimbursed.

Now this protection applies to all firms, with 60 firms that received a claim in the first three months of the policy reimbursing victims of APP scams.

There’s also now a much more level playing field in who is responsible for the cost of reimbursing victims. This acts as a strong incentive for both the victim’s bank or payment firm and the fraudster’s bank or payment firm to prevent the fraud in the first place.

The sending and receiving firms must now work together and share information to identify the APP scam and reimburse victims.

Early data shows that this has started well, with most claims (86%) being reported by the sending firm to the receiving firm within two business hours of the consumer raising the claim.

It’s a positive start, and we have heard from banks that the new rules have spurred an improvement in communications between firms.

But we have heard from stakeholders that that the information shared is sometimes limited and improvements are needed to allow the two parties to collaborate effectively to prevent the fraud in the first place.

We’re also seeing this collaboration have positive outcomes for consumers: 84% of claims were closed within five business days, indicating that in most cases sending and receiving firms are working together to give the consumer a prompt response to their claim, helping build consumer trust during what can be a difficult time.

3. Rates of fraud reported

In the lead-up to our policy going live, some were concerned that there would be a sharp rise in the number of APP scam claims that firms would receive. We have seen no evidence of any increase to date.

The data suggests that the volume of APP scam claims submitted by consumers was lower relative to a similar period in 2023.

There were around 46,000 claims from consumers in the first three months. UK Finance reported 225,000 cases of APP scams in 2023, which equates to 56,000 cases across an average three-month period in 2023.

Although direct comparisons are not possible between these figures, it does imply that there was not a rise in claims in the first three months of the policy. This trend is consistent with the anecdotal feedback and data provided by industry that we have used previously.

This being said, volumes have steadily increased each month and we expect this to continue in the short to medium term as victims become more aware of the policy. Lower volumes at the start of the policy are expected as this data does not include claims where the scam occurred before 7 October 2024 and it takes time for consumers to report an APP scam.

We have heard from the Bank of England, as the operator of the high-value payments system CHAPS, that the number of APP scam claims on that system was low in the first few months of the policy.

We heard similar stories from the Financial Ombudsman Service and the FCA. Neither organisation saw a surge in the number of complaints relating to reimbursement under the new rules. However, we must consider that consumer complaints may take some time to come through and we will keep this under review.

4. Customer caution

Another concern raised with our policy was that it could lead to an increase in payments where customers had not been cautious enough – or even reckless – when making transactions because they were too confident they would be reimbursed if the payment turned out to be a scam. This is also known as moral hazard.

To counter this, we said firms could apply a £100 excess and consider whether the consumer standard of caution exception applied if the victim was grossly negligent when making the APP scam payment.

Just 2% of total claims were rejected because the consumer standard of caution has not been met. We also heard from industry stakeholders that they did not see a significant shift in customer behaviour as a result of the policy.

However, we are seeing differences in how frequently firms are applying the exemptions. This is backed up in the data we are seeing: only 23% of firms that received a claim in the period used this exception as a reason for rejecting reimbursement.

We’re working with firms and other stakeholders, including the Financial Ombudsman Service, and will keep under review whether more clarity is needed on when this exception should be applied.

We continue to urge consumers to exercise caution when making payments, to stay alert to warnings from their bank or payment provider and to remain vigilant, particularly when using social media, technology platforms and telecoms. We know from our 2024 Fraud Origination report that fraudsters often use these to target consumers – and the impact can be devastating.

Next steps

We have seen positive indications that our policy is having the outcomes we want for consumers, but know that this is still early days. We’ll continue to monitor progress alongside the FCA and share updates like this one.

In October 2025, an independent review on the effectiveness of the policy will begin – enabling us to take stock of where we are after the policy has been in place for a year. We will continue to engage with industry stakeholders and consumer representatives on their experiences of the policy and thank firms for all the constructive feedback we have received so far.

Through working together we can help ensure that we continue to protect victims from fraud and ensure strong incentives to prevent fraud in the first place.

Article Credit: https://psr.org.uk/news-and-updates/thought-pieces/thought-pieces/the-story-so-far-a-snapshot-of-what-we-ve-seen-since-our-app-scams-reimbursement-requirement-went-live/