PSR draft guidance on the APP scams reimbursement requirement: Supporting the identification of APP scams and civil disputes - Which? response

Summary:

• We welcome guidance to support PSPs in their assessment of whether an APP scam claim raised by a consumer is eligible for reimbursement under the new reimbursement requirement, or is a civil dispute. These cases are often complex with some grey areas, therefore guidance is needed to help clarify the distinction between an APP scam and civil dispute and support firms in making correct reimbursement decisions. We do not want PSPs to use civil disputes as an excuse for not reimbursing scam victims.
• It should be added to the guidance that the burden of proof must be on the PSP to establish that the claim was in fact a civil dispute. As currently drafted, the guidance fails to draw enough attention to the obligation of firms to thoroughly investigate the facts of each case, as set out in the PSR’s guidance for firms on the consumer standard of caution.
• While we believe the five key factors that a PSP should consider when assessing these claims are broadly right as drafted, there is some ambiguity where we feel extra clarification would be useful. In particular, we think there are two areas of the guidance which may need amendments:
  • ‘PSPs should check and consider information held… by Companies House…’ (2.15): We believe a positive trading status via Companies House is never enough to identify a legitimate company or a company not acting fraudulently. The wording of the guidance should be more explicit on the effectiveness, or lack thereof, of relying on a Companies House search.
  • ‘Where goods or services have been received/provided but in the consumer's view are not as described, or are damaged or defective, or of poor quality, and there is no evidence of an intent to defraud, then this is more likely to point to a civil dispute.’ (2.18): Work not being completed is not a dictator itself of a civil dispute, as this could have been the intention of the criminal all along. The above wording should be amended to read, ‘... then this may point to a civil dispute’. Moreover, the guidance should expressly mention that where a trader is likely to have been in breach of unfair trading laws, this should not be treated as a civil dispute.
• The PSR should monitor PSPs applications of this guidance. Given that the guidance is indicative only, the PSR will need to ensure that PSPs are implementing it consistently on a case-by-case basis. The PSR should work with the FOS to continually improve guidance.