PSR update on impact of APP fraud reimbursement scheme

The UK Payment Systems Regulator (PSR) has published an update on what it has seen since the implementation of its authorised push payment (APP) fraud reimbursement scheme in October 2024. The data covers UK payments made via the Faster Payments system from the start of the reimbursement policy (7 October 2024) to the end of 2024.

Key findings include:

• Reimbursement rates for victims are high, and vulnerable consumers are better protected. In the first three months, 86% of money lost to APP scams was reimbursed to victims, totalling around £27 million.
• Levelling the playing field. The new policy, which now applies to all firms, has led to more payment firms reimbursing victims of APP scams, with 60 firms reimbursing victims in the first three months. It has also led to increased collaboration between payment service providers (PSPs), although sending and receiving firms must now work together and share information to identify the APP scam and reimburse victims.
• Rates of fraud reported. The data suggests that the volume of APP fraud claims submitted by consumers was lower relative to a similar period in 2023. However, volumes are steadily increasing each month and are expected to continue in the short to medium term as victims become more aware of the policy. The PSR will keep this under review.
• Customer caution. Despite concerns about moral hazard (customers not being cautious enough when making transactions because they were too confident they would be reimbursed if the payment turned out to be a scam), only 2% of claims were rejected for failing to meet the consumer standard of caution, with no significant shift in customer behaviour observed as a result of the policy.

The update also provides case studies based on real-life examples of consumers that have benefitted from the policy. The PSR notes that it has seen positive indications that its policy is having the outcomes it wants for consumers but knows that this is still early days. The PSR will continue to monitor progress, alongside the Financial Conduct Authority (FCA), and share further updates. It will start an independent review on the effectiveness of the policy in October. In the meantime, it will continue to engage with industry stakeholders and consumer representatives on their experiences of the policy.

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