Is battle against fraudsters about to be won at last?

After well over a decade of fraudsters robbing people blind, finally we have some good news! The Payment Services Regulator (PSR) – the organisation in charge of the systems we use to pay for things in the UK – has announced that UK banks and other (but not all) money transfer services must refund people who have been defrauded up to £85,000. This money must now be refunded within five working days.

This is major news, because of a specific type of fraud that I’ve written a lot about in this column over the years – “authorised push payment” fraud (APP).

Push payment fraud occurs when thieves trick you into handing over often huge amounts of money. They do this by pretending to be figures of authority, like your bank manager or a police officer.

From now on banks are obligated to refund your cash speedily if you fall victim to an Authorised Push Payment scammer (Picture: Adobe)

The most common scam involves being told your account has been hacked and you need to transfer your money to a new account to protect it. In fact, this account has either been opened or hijacked by fraudsters and your money is soon divided up in to smaller sums and transferred out almost immediately.

Other types of “big money fraud” work by gaining access to your account passwords using similar methods through phone, email or even text messages. “Conveyancing fraud” is where fraudsters hack emails and trick you or third parties such as solicitors into transferring money generated by things like house sales to fake accounts. I’ve just been helping someone who lost £350,000 due to their solicitor being tricked by this method.

Of course, most attempts at stealing your cash involve less sophisticated methods and lower amounts. But all fraud can have a devastating impact on victims and that’s why the new rules are so important.

Since 7 October – last Monday – banks have had to refund you if you fall victim to a scam or theft of your money within five days. These rules apply to transfers made through banks and building societies “faster payments” services (the way we transfer money from one account to another). It will also cover other types of payment, like CHAPS. Best of all, the rules apply not just to the big brands, but to online banks, smaller payment firms and e-money businesses regulated in the UK. There are a few exceptions, like credit unions, municipal banks and national savings banks.

This is important because until now only businesses that had signed up to a voluntary agreement agreed to refund fraud victims – and even then there was a huge disparity between the best and worst performers.

The rules aren’t retrospective, sadly. But this doesn’t mean that you have no rights if you were conned prior to the new rules coming into effect. The Financial Ombudsman Service (FOS) can and does uphold complaints already about rejected fraud claims. And you can still go to the ombudsman if you’ve lost more than £85,000, too.

This doesn’t give us all permission to be reckless. If you’ve been repeatedly warned about fraudsters robbing you but chose to continue making payments – in a romance scam, for example – don’t expect to get a refund.

One last piece of good news – and a moan from me. The government has confirmed that banks will be given permission to pause suspicious payments for four days while they investigate. I’ve been campaigning for this simple check since faster payments were introduced in 2008. Had this basic security check been introduced earlier, billions of pounds could have been saved, lives might not have been ruined and fraudsters would have been dealt a fatal blow.

Even if banks had prevented large amounts of money from being transferred immediately out of a receiving account it would have solved this problem. Push payment fraud follows such an obvious pattern, it’s almost inconceivable that modern banking payment systems can’t spot it.

So let’s celebrate this decisive victory in the battle over fraudsters – and do the right thing by the victims of fraud who have already lost everything.

​Martyn James is a leading consumer rights campaigner and journalist. Read more from Martyn here.