The Payment Systems Regulator (PSR) has announced that Authorised Push Payment (APP) scams totalled almost £341m in its second annual APP fraud performance report.
The PSR report provides information on three main areas. It details the compensation paid to victims by the largest 14 banking groups in Great Britain and Northern Ireland. Secondly, It also shows the amount of money sent from victims’ accounts by each payment firm as a result of APP scams, involving these same top 14 banking groups.
Additionally, the report outlines the funds received into fraudsters’ accounts through APP scams, covering transactions from accounts held with the 14 largest banking groups to any UK payment firm.
In 2023, the Faster Payments system processed 4.5 billion transactions. During that year, there were 252,626 reported cases of APP scams, totalling nearly £341m.
The report shows that reimbursement for APP scam victims varies by bank. Under the current voluntary framework, 67% of losses were reimbursed, up from 61% in 2022. However, the approach remains inconsistent, with only the sending bank reimbursing losses and neglecting the role of receiving banks in preventing scams.
By volume of cases, Nationwide fully reimbursed 96% of reported APP scam incidents, TSB followed with 95%, and Barclays covered 82%. Conversely, AIB fully reimbursed just 3% of cases, Danske Bank reimbursed 7%, and Monzo reimbursed 9%.
By value of APP scam losses, TSB reimbursed 88% of its customers’ losses in 2023, while Nationwide reimbursed 87%, and HSBC covered 76%. In contrast, AIB Group reimbursed 9% of losses, Danske Bank reimbursed 13%, and Monzo covered 17%.
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.”
In 2023, for every £1m sent by Metro Bank and TSB customers, £266 was lost to APP scams. Customers of Lloyds, Bank of Scotland, and Halifax experienced £228 in losses per £1m sent, while Nationwide customers faced £219 in losses per £1m.
Additionally, for every one million transactions, Metro customers reported 137 APP scams, Monzo customers reported 131, and Nationwide customers reported 129. In contrast, The Co-operative Bank had a significantly lower rate, with only 51 APP scam reports per one million transactions.
The report shows that smaller firms experience higher rates of APP scams compared to larger banking groups. For instance, Skrill saw £18,550 in APP scams per £1m received in 2023. Among larger banks, TSB had £408 in APP scams per £1m received, Metro had £319, Clydesdale/Virgin Money had £285, and Starling had £237. Santander stood out as one of the best in this regard with only £41 per £1m.
Regarding transaction volumes, PayrNet reported 2,705 APP scam payments per million transactions. Metro Bank had 122, Starling 114, and Clydesdale/Virgin Money 78. Meanwhile, Santander had 33 and Barclays 35 APP scam payments per million transactions.
Despite better consumer outcomes than the previous year, the PSR still supports implementing controversial regulatory reimbursement changes. Under this rule, payment firms will share liability 50/50 between the paying and receiving companies, with reimbursement capped at £415,000.
Regardless of the controversy, there is significant pressure within the payments industry to combat fraud. This will be a major challenge for the newly elected Labour government.
Sharing this view, Ryta Zasiekina, Founder of payments company CONCRYT, stated: “The PSR APP Fraud league tables are a crucial tool for monitoring which organisations are leading the fight against APP fraud.
“These types of fraud have a profound impact on victims, not only in terms of monetary loss but also in the emotional and psychological toll they exact. It’s encouraging to see which organisations have significantly improved their performance from last year, and equally important to identify those that continue to struggle in protecting consumers.
“Notably, while other types of APP scams are declining, romance scams are on the rise, indicating a pressing need for increased efforts to combat these crimes. The Government must intensify its awareness campaigns, and payment firms need to enhance their protective measures. These league tables represent a vital step towards addressing these issues and ensuring accountability among firms.”