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HOW NEW UK GOVERNMENT FRAUD REGULATIONS WILL AFFECT PREVENTION STRATEGIES
New regulations regarding Authorised Push Payment ( APP ) fraud have come into force in the UK from the start of October . These new regulations will see a maximum compensation of £ 85,000 for this type of crime , and affected individuals can expect to be reimbursed within five business days of making their claim . Ellie Burns , Head of Product and Customer Marketing at IDnow , outlines the changes and what impact it will have on fraud prevention strategies .
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IN SHORT , THE INDUSTRY MUST IMPROVE ITS ABILITY TO FIGHT FRAUD OR FACE SIGNIFICANT REIMBURSEMENT FEES .
HE FINANCIAL LANDSCAPE
T in the UK is set for change , with new government regulations coming into force from the start of October . Under these new landmark rules , UK payment service providers ( PSPs ) – so all British banks , FinTechs and payment companies of all sizes – are mandated to reimburse victims of Authorised Push Payment ( APP ) fraud , due in no small part , to the increasing levels of APP fraud the UK is currently experiencing .
Indeed , figures from UK Finance ’ s 2023 Half Year Fraud Update reported £ 239.3 million losses in the first six months of 2023 as a direct result of APP scams .
With these major changes taking place , and with the impact of their introduction to be felt by both consumers and providers , identity verification technology will play a vital role in preventing fraud as well as ensuring compliance with the new regulatory requirements .
2 . The cost of reimbursement will be shared equally between the sending and receiving PSP , in the hope it will incentivise both parties to detect and prevent fraud
In short , the industry must improve its ability to fight fraud or face significant reimbursement fees .
Impact of regulations on fraud prevention strategies
The special difficulty in detecting APP fraud lies in the fact that the transactions are put through by a genuine person who has been socially engineered to do so .
And while there is no silver bullet for fighting fraud , organisations should implement an effective cybercrime and fraud prevention
For the UK finance and payments sector , the new regulations will have two key outcomes :
1 . PSPs must reimburse consumers who are victims of APP fraud up to a maximum level of reimbursement of £ 85,000 , unless the consumer acted with gross negligence or was themselves actively part of the scam
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