Victims of bank transfer scams may be left unprotected after January 1st, after the banking industry was unsuccessful in coming to a consensus on how to fund a central reimbursement plan.
While financial institutions agreed that victims should be reimbursed, no plan was forth coming. As a result, the current funding agreement comes to an end on December 31.
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The Problem: Authorised Push Payment Scams
Authorised Push Payment scams (APP) are becoming more frequent. They work like this: fraudsters (criminals) trick individuals or consumers into sending money to a bank account controlled by the criminal. The crook urges the individual to use a real-time payment scheme, because these types of transactions are irrevocable. In other words, a victim is not able to reverse the charges when they realise they’ve been scammed.
Criminals use social engineering tactics to con money from their victims. These cons may also hack into email and other networks in preparation for their victims, using the authorized push payment method to get their money. The scam doesn’t only hit individuals, but also targets businesses with this technique.
Money is received instantly and can be quickly moved to other accounts. And victims are not able to reverse charges to get their money back. It’s the perfect crime.
What Do the Attacks Look Like?
Attacks take various forms and can include the following:
- Payment of an invoice: the document may look like a legitimate bill but is actually from the fraudster. Money is sent directly to the fraudster’s account.
- Account takeover: criminals may initiate push payments to new payees, across different channels, in order to go under the radar and avoid fraud controls.
- Sending a payment: maybe someone’s been working for you, say a carpenter’s been working on your home. Then a payment request comes via email, looking as if the carpenter sent it. However, the message is actually from a fraudster.
These are only a few of the examples of this growing problem. The scam can take various forms, all using APP method to send funds to the criminal’s account.
More than £1M a day is currently lost to these types of scams. So, the failure of financial institutions to agree on a reimbursement plan leaves victims unprotected. The only recourse may be the government stepping in to solve this issue.
Current Funding Agreement Ends December 31st
Under the current system, if a customer suffers a lose of money due to the APP scam, they can be reimbursed if the bank is found to at fault. The bank then uses its own funds to pay the customer back. However, if the bank has warned the individual and the person is found negligent, they may not have their funds reimbursed.
If neither the individual nor the bank are found to be at fault, the victim of the scan is then reimbursed from the no-blame fund.
The no-blame fund is set to end on December 31st, and no one knows what will happen next. Banks will still be able to refund victims, according to the Payment Systems Regulator. The organization expects banks to protect their customers.
Avoid Becoming a Victim of the APP Scam
While these attacks are on the rise, there are things you can do to stay safe and avoid becoming a victim of these types of scams. Here’s what you can do:
1). Banks and other organisations never contact you asking for your PIN or complete password and will never request that you transfer money into another account.
2). Criminals can easily find some of your personal details, including your name, address, etc. Not everyone who contacts you with this information is to be trusted.
3). If you receive an email from an unknown sender or if the email is from a familiar person or organization but doesn’t look right, avoid clicking links or filling out information screens within those emails. These are phishing emails that are out to get your personal information.
4). If someone requests information from you, and you did not contact them, it’s probably a scam. If you have a doubt, then directly contact the company yourself and check to see if they were behind the request for information or not.
What to Do if You’re the Victim of an APP Scam
Falling victim to such a scam can happen to anyone, so there’s no shame involved. If you have been scammed, then here’s what you can do:
Contact your bank right away: let the bank know what’s happened and give them the bank account number your money was sent to. The bank may be able to stop the transaction from going through or they may be able to recover your money. To achieve this end, you must alert the bank to the scam as soon as possible. The faster, the better.
It’s possible your bank will ask you several questions about the incident and may ask you to send in evidence. This can include copies of text messages and/or emails.
Contact the bank where your money was sent: after calling your bank, next call the bank where the money was sent and tell them the account number used. This bank may be able to stop the transaction and get your money back.
Make a formal complaint: your bank may be part of the Authorised Push Payment Scam Code, which went into effect back in May 2019. The code only applies to transfers between UK accounts, not overseas accounts.
Even if you’ve followed all the steps to report the incident, you may not receive your refund if the bank claims you were negligent or that you somehow authorized the transaction. If this happens, you can file a claim with the financial ombudsman. They make the final decision on whether or not a victim will receive reimbursement.
The APP scam is on the rise; however, by protecting your personal information and taking precautions to avoid phishing attempts in emails, etc., you can avoid falling victim to this expensive, devastating scam.