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Earlier this month, we reported that the funding scheme for helping bank transfer scam victims was due to end on December 31st of this year. However, it has been announced that funding has now been extended to March.

The voluntary scheme, launched back in May, makes it possible for victims of authorized push payment (APP) fraud to get their money back if they are not found to blame by their bank.

Trade association UK Finance said, “It is currently anticipated that the amount of the interim funding for the ‘no-blame’ scenario, currently set to expire on December 31, 2019, will last until at least march 31, 2020, at which point progress will be reviewed.”

This is very good news for customers; however, no consensus has been reached on how to keep the funding going after March. The funding scheme, set up by the banks to repay customers effected by the APP scam, will be safe until sometime in March.

 

Only a Stopgap Measure

Jenny Ross, Which? money editor, said, “This agreement is merely a stopgap that highlights the industry’s failure to secure vital long-term reimbursement for innocent victims of devastating transfer fraud.

“It’s clear that a voluntary, industry-led approach to protecting scam victims is not enough.

“The next government must work with the regulator to make the code and reimbursement mandatory – to finally ensure millions of people are no longer at risk of losing life-changing sums of money.”

Before the scheme was put in place, many people ended up losing large amounts of money to the scam. At that time, banks were not required to pay customers back if they had authorized the payment. The voluntary code was seen as a step forward in protecting banking customers who have fallen victim to APP scams.

 

How Do the Scams Work?

In APP scams, criminals call, email or text people while pretending to be a legitimate organization such as a bank or another type of business. The criminals then get victims to authorise a transfer of money in their bank account. Another version of the scam involved criminals getting victims to make purchases from fake or unofficial sources.

This has been a growing problem, with consumers losing a total of £208 million to the APP scam in the first half of this year.

 

The Current Voluntary Bank Code – How Does It Work?

In the voluntary code, banks have agreed to some specific measures to help cut down on APP fraud. These efforts include educating customers about fraudsters and how the scams work. The code also stipulates that banks need to identify customers who are at greater risk for falling victim to the scam, then warn them when the bank has spotted fraud and try to stop payments if fraud is suspected.

Victims can receive a refund if:

  • The bank is at fault: the bank will then refund their customer’s funds, if the customers has done everything in their power to keep their money and accounts safe.
  • The customer and the bank are not at fault: the customer will receive a refund, though it won’t come directly from the bank. Instead, the customer will payment from the collective pot set up for this very purpose by the banks that have agreed to the voluntary code.
  • Shared fault: if the bank and the customer are found to both be at fault, the customer will receive a partial refund. The amount of reimbursement will depend on the who is to blame. Any amount not reimbursed to the victim will be a loss.
  • Customer is at fault: if this is the case, they will not receive a refund. This only happens if customers are found to be negligent in that they didn’t everything they should to keep their account and money safe.

For now, the funding pot, set up by the banks under the voluntary code, will remain funded for anyone who becomes victim to the APP scheme, and is found not to be at fault in the scam. This is good news and the hope is that come March, a more permanent solution will be found by the banks to help those who have fallen for the scams.

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