Stop the scammers update : How to get help from your bank if you are a victim of fraud

A few months ago we published a series of articles called Stop the Scammers. These covered issues such as mobile phone fraud, scam texts, phishing emails, fake websites and people impersonating businesses. 

Sadly, the nature of scams changes all the time, so this is a topic that we will return to from time to time. But in this article we focus on recent legal changes designed to help victims of scams. These changes came into effect during October, and for 99% of scam victims the changes are good news. 

Let’s take a look at some of the main impacts of the changes.

Banks can pause suspicious payments for up to 4 days

From the end of October banks have been given the power to pause payments for up to four days. Before this, bank transfers had to be either processed or declined by the end of the next working day. Even if the bank were to suspect the transaction may be fraudulent, they also faced pressure from customers who understandably wanted payments to be made instantly.

Extending the payment pause by three more days will give banks and payment providers more time to investigate fraud where they have reasonable grounds to suspect this to be the case. These grounds will include any unusual spending patterns or recipients. If the delay is implemented, banks will need to contact a customer to explain the situation, and either investigate further or receive confirmation from the customer before the money is transferred. 

Concerns have been raised about this new power – for example in the case of a bank customer needing to make a one-off money transfer quickly as part of a home move – and there is the possibility of compensation if a payment delay means that a customer has to pay extra charges.

Money paid to scammers will be refunded within 5 days

Before October, most High Street banks and payment companies had signed up to the Contingent Reimbursement Model (CRM). Under the CRM, they would voluntarily compensate customers who had been tricked into sending money to scammers.

However, the CRM has now been replaced by a Mandatory Reimbursement Requirement. This requires UK banks and other payment service providers to refund fraud victims up to a maximum of £85,000 within five days.

You should be covered by the new rules if you:

• made a transfer as part of a scam on or after 7 October 2024;
• made the transfer to another UK account;
• inform your bank or payment service provider within 13 months of making the payment.

Also under the new rules, your bank or payment service provider will be able to claim half of the refund back from the financial institution the fraudster used to receive the stolen money. So the cost of your refund will be split 50-50 between the two banks/payment service providers sending and receiving the fraudulent money.

This makes it even more of a priority for banks and payment providers to do all that they can to protect their customers from scams. If they can prevent fraud taking place, they won’t have to pay towards the cost of it.

Money will now be refunded for APP fraud

The most common financial scam for consumers is known as an APP – an Authorised Push Payment. An APP involves a scammer persuading you to make a bank transfer to another bank account. Three typical ways they can do this is by:

• Asking you to pay a fake invoice for good or services;
• Enticing you to make a fake investment;
• Impersonating a legitimate person or organisation.

Before October there was no specific requirement for banks or payment providers to refund victims of APP fraud, but under the new refund rules APP fraud is now covered and will be treated like any other kind of fraud.

But why are the changes only good news for 99% of scam victims?

Before the new rules came into force, those banks that did offer fraud compensation to customers could pay out up to £415,000. But now the payout cap has been reduced to £85,000.

According to PSR – the Payment Systems Regulator – the £85,000 cap will cover more than 99% of claims. There were over 250,000 fraud compensation payouts in 2023, and only 411 of these were for more than £85,000. However, the consumer organisation Which? has raised concerns about the lowering of the cap and called for the impact of this to be monitored by the Payment Systems Regulator.

Even though most scams are well below £85,000, it is increasingly important to be extra vigilant about sophisticated scams that could potentially involve larger amounts, for example anything to do with your property.

What to do if you think you have been scammed?

Even with the recent changes, being scammed is still a very upsetting and frightening experience. So it’s important to know what to do if you have transferred money in what you now believe may be a scam. 

Advice from the Financial Ombudsman is to follow four steps if you think you have been scammed:

1. Contact your bank or payment services provider immediately.
2. Contact the police on 101.
3. Report the scam to Action Fraud – the UK’s national reporting centre for fraud and cybercrime.
4. Keep records of all contact and correspondence between you and the scammer in case they are needed by your bank or payment services provider.

If you’re unhappy with the way your bank or payment services provider deals with the situation you have the right to make a formal complaint to them. They are obliged to send an initial response within 15 days and a full response within 35 days. 

If you are not happy with this response or if they don’t reply in time you can then complain to the Financial Ombudsman.

We hope that this article has given you some useful information on how recent changes to the law affect your rights to compensation if you are scammed, and what to do if you are scammed.

If for any reason your compensation is delayed and you need a personal loan to tide you over, remember that Loans 2 Go offer emergency loans that may be able to help.

For more useful financial and lifestyle tips, visit us here again soon at Loans 2 Go.