Are new fraud refund rules working?

Mandatory reimbursement has transformed outcomes for bank transfer fraud victims, but are these hard-won protections already under threat?

This groundbreaking scheme, introduced by the Payment Systems Regulator (PSR) on 7 October 2024, marked a major shift in consumer protection after years of victims facing wildly different outcomes depending on where they banked.

It means that payment providers must reimburse victims of authorised push payment (APP) fraud – those who inadvertently send money to scammers – up to £85,000 in all but exceptional circumstances. However, major gaps remain and the scheme is at risk of being watered down, even though reimbursement data proves its worth. 

Major gaps in protection

Losses to APP fraud are still very high, surging by 19% to £576.4m last year, but the PSR says reimbursement climbed from 61% in 2024 to 88% in the first 18 months in the scheme. 

Crucially, in only a fraction of cases (2% at last count), victims are deemed to have failed to meet the required ‘consumer standard of caution’.

Around 30% of APP fraud claims are rejected as out of scope, yet the PSR doesn’t publish a detailed breakdown explaining why. An independent report from consultancy Frontier Economics found wild inconsistencies, with some banks rejecting only 2% or less of claims as civil disputes compared with 20% at others. 

This suggests some firms too readily dismiss cases as civil disputes, affecting claims related to complex investment fraud and cowboy traders. 

Rogue tradespeople are the third most common APP fraud threat, based on a snapshot of 160 scam reports Which? received via our scam sharer tool between January 2025 and April 2026. Investment and cryptocurrency scams topped the list, followed closely by purchase scams.

Victims who send money to international bank accounts or use cards, cryptocurrency and money-transfer apps, have little or no protection at all. 

It’s clear that many people don’t understand this. When we surveyed Which? Connect panel members* who believed themselves to be victims of APP fraud, only 31% had sent money to scammers by bank transfer, while 55% used a debit or credit card and 8% used PayPal.

These ‘hybrid payment scams’ are a thorny issue as the reimbursement scheme only applies to UK bank transfers routed through Faster Payments and Chaps.  

• Find out more: how scammers thrive on social media.

The international transfer loophole

Jackie Greer, 65, a nurse in Brighton, was looking forward to some sun after booking a holiday rental advertised on a Spanish property marketplace last August. Fearing it would get snapped up, she got in touch. 

The ‘owner’ asked to switch to WhatsApp and sent an invoice for €4,250, which she duly paid. A week later, the marketplace said it had removed the advert for fraud. When it refused to refund her, she asked her bank to step in.

‘I found the process rather laborious. I had to cut and paste all of the communications from WhatsApp and from emails, etc. I’m not very IT literate, so I struggled with this and was already very stressed.’ 

Because the reimbursement code doesn’t cover transfers to international accounts, she remains out of pocket. Jackie said: ‘My bank was late responding and said it was still investigating. Then, two minutes later, it sent a message to say it wouldn’t be refunding me.’

• Find out more: how to protect yourself against fraud.

Potential threats to reimbursement

Alongside concerns about gaps in protection, there are ongoing battles over the details of the reimbursement scheme itself. 

The reimbursement cap started life at £415,000 in early proposals and landed at £85,000. This matched the Financial Services Compensation Scheme (FSCS) deposit limit at the time, which has since been increased to £120,000. 

A more critical threat is the growing pressure to carve investment and cryptocurrency fraud out of the reimbursement scheme entirely. 

Even under current rules, victims can fall through the cracks if investment scammers promise high returns over long periods, because they can miss the 13-month reporting window by the time the scam comes to light.

Although the Financial Ombudsman Service (FOS) remains an essential backstop, capable of awarding compensation of up to £430,000, government proposals to narrow its ‘fair and reasonable’ remit could undermine its role. This risks significantly weakening the FOS’s discretion where a firm complies with the letter of the law, but still delivers a poor outcome for the customer. 

• Find out more: what are the rules for APP fraud reimbursement?

What needs to change

While the ongoing details of the scheme are being debated, the reality is that the reimbursement scheme broadly works well – for those who are eligible and make a claim. 

In our survey, 63% who said they had lost money to APP fraud under the new scheme and made a claim found the process easy. Yet 29% didn’t even tell their bank, mostly because they thought the amount was too small, believed they were to blame or were unaware the scheme exists. 

We think some key fixes are needed to protect consumers and secure the scheme’s future:

1. Staff training Banks’ frontline customer service staff must be trained properly, as staff risk discouraging formal claims if they incorrectly tell victims they’re not eligible. We want banks to support claims, investigate cases thoroughly and clearly remind customers to use the FOS if they’re unhappy with final decisions. Where banks fail to identify highly uncharacteristic account activity or ignore evidence of fraud, there are strong grounds for compensation. 
2. Promote the Ombudsman Public awareness of the FOS is too low (when we surveyed fraud victims in 2024, a third said they hadn’t heard of the service), which matters because banks make mistakes. Data we obtained on APP fraud complaints that the FOS received in 2025 shows that 30% of cases overall were upheld in favour of customers. 
3. Restore league tables and transparency Moving the dial requires the broadest possible transparency, so we want to see firm-specific data on reimbursement rates and APP fraud received – these APP fraud 'league tables' have been quietly abandoned by the PSR – to maintain public confidence in the scheme and expose poor performers.
4. Hold Big Tech accountable Most people reporting bank transfer fraud to our scam sharer were targeted online or via social media platforms. Where people named one, Facebook was the platform most likely to be involved in reports since 2025. Yet social media firms aren't on the hook for the fraud on their platforms. The public can’t be expected to outsmart an industrialised, multi-channel criminal underworld every time; banks and tech companies need to step up when things go wrong.

*In February 2026, we surveyed 14,182 Which? Connect panel members: nearly 300 said they had lost money to APP fraud since October 2024, while 198 filed a reimbursement claim.