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Could this be the key to preventing devastating bank transfer fraud?
New proposals published by the Payments Strategy Forum today announce tighter measures to protect customers from online bank transfer fraud.
The proposals aim to provide additional levels of security and control to customers.
Confirmation of Payee, a measure which stops criminals from fraudulently taking money from bank accounts, will be developed further to help people bank online securely.
What is confirmation of payee?
Confirmation of Payee is a mechanism used in online banking to confirm that a customer is making a transfer to the correct account before it is sent through.
When making a bank payment, two pieces of information are required. The first is the sort code which is a unique number that identifies the bank branch. The second is the account number which identifies the customer's account.
Currently, when setting up payee details the sort code and account number are checked to ensure that they are correct and can be sent to a valid bank account.
While this helps to identify whether or not the payment will be sent to a viable account, it doesn't confirm any details about the account holder themselves.
This is where Confirmation of Payee steps in and adds a new step to verify that the bank details and account holder of the person receiving a payment are exactly who the person making a transfer expects them to be.
- Find out more: online banking security.
Why do we need Confirmation of Payee?
The aim of Confirmation of Payee is to make sure that the recipient of any payment is exactly who a customer intends them to be.
People who bank online are susceptible to two main risks. The first is accidentally making a payment to the wrong account. According to a recent Which? survey of of the general public, one in 10 people have accidentally transferred money into the wrong account.
The second is fraud. Bank transfer fraudhappens when a person is tricked into transferring money into a scammers account. This can be done in various ways and usually involves a person being misled about the recipients true identity.
In the past six months alone,thousands of people and business have been tricked into transferring around £100m to scammers.
Victims of bank transfer fraud currently have no legal right to get their money back from their bank.
Which? launched a super-complaintearlier this year to the Payments System Regulator (PSR) calling for an investigation into whether banks are doing enough to protect customers from bank transfer scams.
- Find out more: How to spot a scam.
When will Confirmation of Payee come into force?
The Confirmation of Payee measure is expected to be rolled out by the end of 2018.
Which? continues to advocate for stronger protection for customers, especially when banking online.
Fraud is now at record levels and costs people in the UK a whopping £9bn a year. To support our calls for more safeguards against scams sign our petition.
