Independent review finds UK's APP scam reimbursement rules cut fraud losses by £73m a year
Independent review finds UK’s APP scam reimbursement rules cut fraud losses by £73m a year #
An independent evaluation of the UK’s authorised push payment (APP) fraud reimbursement policy has concluded that the rules are reducing fraud losses and prompting payment firms to invest in prevention, according to the Payment Systems Regulator (PSR).
The assessment, carried out by consultancy Frontier Economics, estimated that APP fraud losses have dropped by roughly £73 million a year since the policy took effect, with the number of scams falling by nearly 35,000. Frontier’s analysis found that APP fraud losses sent over the Faster Payments system fell by about 21% following the introduction of the reimbursement requirement.
The PSR said reimbursement rates across all claims have risen from 54% to 65%, while for claims within the policy’s scope firms are now returning money in 97% of cases. The largest improvements came from firms that had recorded the highest APP fraud levels before the rules took force, which the regulator described as a sign that the incentives are working as intended.
Frontier estimated that, even after accounting for additional costs borne by payment service providers, the policy is delivering a short-term net benefit of between £17 million and £29 million, a figure the consultancy characterised as conservative.
David Geale, managing director of the PSR, said the evidence shows the policy is working, with losses down and more victims reimbursed, but cautioned that criminals continue to adapt and that technology firms and telecoms providers need to do more to keep pace.
The review found no evidence of firms exiting the market or of reckless consumer behaviour, two outcomes critics of the policy had predicted. However, Frontier noted that consumer experiences remain uneven, as some losses go unreimbursed because they fall outside the policy’s scope or are subject to limits and exceptions.
In response, the PSR has published a roadmap outlining its next steps and plans to launch a consultation on improving consistency in how the policy is applied. The regulator said it will also release further data identifying the platforms fraudsters use to target victims, and will work with partners to address fraud at its source.
Copy link