Push Payment Fraud Explained
Last year, Push Payment fraud tricked 84,000 individuals to lose £354 million with only £83 million being refunded.
That money was lost by the individual after being caught out by push payment fraud where they were tricked them into transferring money to them and only a fraction of the money lost has been recovered or returned.
The push payment frauds are now focused on attempting to trick individuals rather than attempting to steal money from the banks themselves.
The push payment frauds involve attempting to impersonate someone who the individual was expecting to pay, such as a solicitor involved in the purchase of a house or through the sale of goods online.
Other push payment methods include using data breaches to gather information from computers or social media accounts so that the fraud can be personalised toward the individual to make it more believable.
Once the push payment fraud is successful and the individual has been tricked, they then make payment to the fraudsters rather than the intended party.
As it has been the individual who has authorised the push payment, the bank is often unwilling to refund the amount lost as a result of the fraud, meaning that the individual is then out of pocket for, on occasions, many thousands of pounds.
Push Payment Protection Scheme
Now 8 banks have signed up to a scheme where, when neither the bank nor the customer is to blame, the money lost if refunded from a central pot.
The bank brands who have signed up to the push payment fraud scheme are:
- Barclays
- HSBC
- First Direct
- M&S Bank
- Lloyds
- Halifax
- Bank of Scotland
- Metro Bank
- Nationwide
- NatWest
- Ulster Bank
- Royal Bank of Scotland
- Santander
- Cahoot
- Starling Bank
Once an individual realises that they have been defrauded in a push payment attack they report the fraud to the bank immediately.
Those individuals who are customers of the 8 banks participating in the scheme will be assessed on a new set of criteria to determine whether the money lost should be replaced.
Banks previously only reimbursed those where it could be shown that a failure existed in the manner in which the payment had been dealt with by the bank.
The scheme ensures that any individuals who took reasonable care or was vulnerable, to be more likely to be refunded any money lost through push payment fraud.
This push payment scheme involves the larger banks contributing to a central pot of money that can be drawn on in order to refund customers when the bank or the individual is not to blame based upon a decision taken within a maximum of 7 weeks for complex cases.
The scheme does not cover individuals who were previously the victim of push payment fraud and nor will any customers found to have been grossly negligent in losing money.
Whilst some major banks, including Virgin and Co-op have not yet signed up to the scheme, TSB has made a guarantee that any individuals who inadvertently fall victim to push payment fraud would be fully refunded.
Banks are also producing a scheme that ensures that the name of the account becomes as relevant to the account number and sort code to ensure that push payment fraud cannot continue in the current form. However, this scheme is not going to begin until after March 2020.
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