Banks to be given more time to investigate fraudulent payments

UK banks will have more time to investigate payments they suspect could be fraudulent.

New legislation introduced by the Government will give UK banks the power to suspend payments for up to 72 hours if they suspect a customer is being scammed.

Currently, banks have 24 hours to process payments in most cases.

The extra time will allow banks to contact customers about payments they suspect could be fraudulent, as well as giving them the opportunity to contact police and other agencies if necessary.

The bill aims to protect customers from losing money to fraudsters through authorized push payment (APP) fraud, one of the fastest growing types of financial scam.

According to the Government, victims lost approximately £485 million due to authorized push payment fraud in 2022.

This type of fraud occurs when scammers trick customers into sending them money by posing as family members, romantic partners, and even the police. Phishing scams and romance scams are forms of app fraud.

The bill comes as Santander issued a warning to its customers about a new identity theft scam.

The bank warned customers that “criminals are impersonating us” by contacting customers and posing as members of Santander’s fraud or security team.

Scammers say there has been fraudulent activity on the account to trick customers into giving them their money.

For example, they may tell you that your account is at risk and that your money needs to be transferred to a new account to keep it safe.

In other cases, the bank warned that scammers may even direct customers to the Santander website to verify the number they appear to be calling from. They can make it look like they are calling from an authentic number with a trick called “spoofing.”

Commenting on the Government’s bill, Ben Donaldson, managing director of economic crime at UK Finance, said: “UK Finance has long called for firms to be allowed to delay payments in high-risk cases where fraud is suspected. , and we are delighted to see the bill supporting it.

“This could give payment service providers time to contact customers and offer them the advice and support they need to avoid being coerced by criminals who want to steal their money.

“This could potentially limit the psychological damage these horrific crimes can cause and prevent money from getting into the hands of criminals.”

The new APP fraud protections will come into effect on October 7 of this year, the Payment Systems Regulator announced in December.

Under the new regime, payments companies, including banks and building societies, will have to refund customers within five working days of a report that they have been victims of PPP fraud.

The maximum compensation payable is set at £450,000 and banks will set an excess claim of no more than £100. Where a customer is vulnerable, no deductible may be applied.

Will Christopher, civil fraud partner at Kingsley Napley, said: “It seems entirely sensible for banks to have more time to process transactions if they have concerns about fraud or dishonesty, especially given that they will have to refund eligible victims up to a maximum of £450,000 from October under related proposals.