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Find out moreHow scam refund rules are reducing fraud
Scam victims are losing less money due to mandatory bank reimbursement
Tali writes about scams and consumer rights for Which? delving into fraud, technology and consumer rights topics to keep readers safe and empowered.
Rules requiring banks to reimburse many authorised push payment scam victims have helped cut fraud losses by an estimated £73m a year, according to an independent review commissioned by the Payment Systems Regulator (PSR).
The review also found that the number of APP scams has fallen by nearly 35,000 a year since mandatory reimbursement was introduced in October 2024, while more victims are getting their money back.
Read on to find out how the reimbursement scheme works, how Which? campaigned for it and what more still needs to be done.
What is the mandatory reimbursement scheme?
The Payment Systems Regulator (PSR) introduced the mandatory reimbursement scheme in October 2024.
It requires banks, building societies and e-money firms to reimburse many victims of authorised push payment (APP) fraud – where you're tricked into transferring money to a scammer – within five business days in all but exceptional cases.
This could be in a scam where you receive a call, text or email impersonating a well-known company, or if you're persuaded to pay a fraudster by bank transfer for goods that never arrive.
The maximum amount you can claim is £85,000 and this is split between the sending and receiving firms. You can also be asked to pay a fee of £50 or £100 unless you are considered vulnerable.
The scheme doesn't cover every situation. For example, it doesn't apply to debit or credit card payments, international transfers or cryptocurrency transactions. Your provider can also reject a claim if it has evidence you were complicit in the fraud or were particularly careless.
The reimbursement limit was originally due to be £415,000, but the PSR reduced it following concerns from parts of the banking industry.
- Find out more: what to do if you are a victim of a bank transfer scheme
What did the review find?
Consultant Frontier Economics found that losses to APP fraud have fallen by an estimated £73m per year and the number of APP scams has fallen by nearly 35,000 due to mandatory reimbursement.
It also found that scam victims are being reimbursed at a rate of 65%, up from 54%. For claims covered by the reimbursement scheme, firms are now reimbursing victims at a rate of 97%.
The biggest reductions in APP fraud have been seen at firms that had the highest fraud levels before the policy came into force, suggesting the reimbursement rules have encouraged firms to do more to prevent scams.
Before the policy was introduced, some banks warned that mandatory reimbursement could make consumers less careful about sending money and force firms out of the market. However, the review found no evidence that either had happened.
The review also found that some banks are applying the reimbursement rules differently, meaning similar claims can have different outcomes depending on who you bank with. The PSR plans to consult later this year on changes aimed at making decisions more consistent.
How Which? helped change the rules
Through our campaign to stamp out scams, Which? has been advocating for reimbursement for scam victims for years.
In 2016, we launched a super-complaint to the PSR demanding that banks protect people from losing money when they've been tricked by a scammer. At the time, Office for National Statistics (ONS) figures revealed an estimated 3.8 million cases of fraud.
The financial regulator investigated and agreed that banks could be doing more and in 2019, a new voluntary code came into effect, which saw reimbursement for blameless scam victims that most major banks signed up to.
However, Which? continued to highlight victims' stories who were denied refunds after experiencing scams and demanded that more be done.
In 2021, the government committed to making reimbursement mandatory for scam victims under the Financial Services and Markets Bill and in 2023, it became law, coming into effect in October 2024.
What more needs to be done
While financial firms are now incentivised to protect customers from fraud, many scams still begin on social media, search engines and online marketplaces.
After years of Which? campaigning, the Online Safety Act (OSA), which makes big tech platforms responsible for stopping scams and other illegal harms on their sites and apps, became law in October 2023. But the impact of this is still yet to be seen.
Big tech is yet to be held accountable for the illegal content that appears on their platforms and, after multiple delays from the regulator, the enforcement of the rules around fraudulent advertising has been delayed until at least 2027.
Rocio Concha, director of policy and advocacy at Which?, says:
'This review by the PSR is a clear endorsement of Which?'s campaign for stronger protections against APP fraud.
'The evidence shows that giving firms and banks the right financial incentives works. Consumers are better protected, APP fraud has fallen, and banks have stepped up efforts to prevent scams.
'Despite warnings from some parts of the banking industry, there is no evidence that these protections have made consumers less cautious or forced firms out of the market.
'The report also exposes worrying differences in how some firms are applying the rules. No scam victim should face a different outcome simply because they use a different bank, and the PSR must take firm action against any bank or payment provider that fails to treat customers fairly.'
