Reimbursement for people who have been tricked into transferring money to fraudsters still largely depends on who they bank with, according to a regulator.
The Payment Systems Regulator (PSR) has published figures tracking the performance of payment firms in tackling authorised push payment (APP) scams and reimbursing victims in 2023.
Two of the biggest banks operating in Northern Ireland — AIB and Danske — had the lowest scores for fully reimbursing victims out of the 14 largest banking groups, and reimbursed the least of the value of money its customers lost to APP scams in 2023.
On the other hand, customers at the same two banks lost the least to APP scams, and were in the bottom three for volume of scams.
Many banks are currently signed up to a voluntary reimbursement code, but in October mandatory reimbursement rules will come into force.
In 2023 victims reported 252,626 cases of APP scams totalling nearly £341m, the PSR said.
Under the existing voluntary reimbursement framework, 67% of money lost to APP scams was reimbursed, marking an increase compared with 2022, when 61% of money was refunded. Members of the voluntary code reimbursed 68% of the fraud value back to consumers in 2023.
Read more
There is still an inconsistent approach by firms when it comes to reimbursing victims, the regulator said. It said some automatically reimburse in full, others may only make a partial refund, while some only accept claims in very narrow circumstances.
David Geale, managing director of the PSR, said: “We can see some positive changes with more victims being reimbursed than in 2022. But there is still more to do — particularly for some smaller firms which have much higher rates of receiving fraud than larger firms.
“Our new mandatory reimbursement measures will dramatically increase protection for consumers. These come into effect on October 7 2024, and we are already seeing payment firms innovating and improving their controls, which is key to preventing scams from happening in the first place.”
Looking at individual banks and building societies, the PSR said Nationwide fully reimbursed 96% of the APP scam cases reported to it, while TSB fully reimbursed 95% and Barclays fully reimbursed in 82%.
Only 3% of cases reported to AIB were fully reimbursed, the PSR said, while Danske Bank fully reimbursed 7%, and Monzo fully reimbursed 9%.
In terms of the value of losses, TSB reimbursed 88% of APP scam losses to customers in 2023. Nationwide reimbursed 87% and HSBC (including the First Direct brand) reimbursed 76%.
Meanwhile, AIB Group reimbursed 9% of APP scam losses, Danske Bank reimbursed 13% and Monzo reimbursed 17%, the regulator said.
The PSR also looked at how much money customers at the 14 biggest banking groups lost to APP scams for every million pounds they sent.
For every £1m both Metro Bank and TSB customers sent in 2023, £266 of that was lost to APP scams.
For Lloyds, Bank of Scotland and Halifax customers, £228 per £1m was lost to APP scams, and for Nationwide customers £219 per £1m was lost to APP scams.
For AIB it was just £38 per million, while for Danske it was £44.
Meanwhile, for every one million transactions made in 2023 by Metro Bank customers, 137 were reported as APP scams. For Monzo customers, 131 transactions in every million were reported as APP scams.
For Nationwide, for every one million transactions made, 129 were reported as APP scams.
By contrast, for every one million transactions made by Co-operative Bank customers, just 51 were reported as APP scams.
The next best performer was Danske on 54, while AIB was third (56).
A spokesperson for AIB NI said: “We’re committed to protecting customers from fraud, making them aware of the latest scams, educating on the best ways to keep their money and details safe, as well as supporting them if they do fall victim to fraud.
“The Payment System Regulator’s report shows that AIB has the lowest level of authorised push payment (APP) fraud per million of transactions, with our customers impacted the least. This is in part due to the level of protection and support we have in place.
“We investigate APP fraud thoroughly on a case-by-case basis to best understand the root causes and protect our customers from such scams in the future. This goes hand in hand with our wider fraud preventive measures which saw us refund 100% of customers in cases of ‘unauthorised’ fraud last year.”
A spokesperson for Danske said: “We take fraud very seriously and continually invest in both preventative measures and education to help protect customers and wider society from scams.
“Through these measures we note a relatively low number of fraud cases recorded at Danske Bank. This does not mean we can be complacent, and the fight against fraud continues. We’re working hard to implement changes required to deliver the new mandatory reimbursement requirement in October 2024.”
Ben Donaldson, managing director of economic crime at banking and finance industry body UK Finance, said: “The financial services sector invests more in countering fraud than anyone else and is the only sector that reimburses victims. Today’s data from the PSR shows reimbursement increased and the majority of authorised push payment fraud is reimbursed.
“Reimbursement is important in the fight against fraud, but it does not solve the problem on its own — victims still suffer the same psychological impact and criminals still get the stolen money, which causes further harm to society.
“Our focus has to be protecting consumers in the first place and that means looking at where fraud originates. Our data shows that over 90% of APP fraud starts online or over the phone, through social media, fake messages and calls.
“Despite this, the technology and telecommunications sectors bear no responsibility for reimbursing victims. That needs to change and these sectors also need to tackle the criminal activity that proliferates on their platforms, sites and networks.”
Rocio Concha, Which? director of policy and advocacy, said: “While there have been some improvements, fraud victims are still facing a reimbursement lottery.”
She said the figures show that mandatory reimbursement rules “cannot come soon enough”.
Stop Scams UK chief executive Mark Tierney said the total lost to scams “is a sharp reminder that the scale of the problem remains unacceptable”.
He added: “We firmly believe that the only way to defeat these criminals is by encouraging further collaborative efforts across the banking, technology and telco sectors in tandem with the public sector and Government. It’s only by working together that we can help protect consumers and prevent them from them from unwittingly coming into contact with a scam.”
Here are the total APP scams losses that were reimbursed to consumers by the 14 largest banking groups in 2023. For example, TSB refunded 88% of the total value of money its customers lost to APP scams in 2023. Figures in brackets show the equivalent figures for 2022:
1. TSB, 88% (91%)
2. Nationwide Building Society, 87% (78%)
3. HSBC and First Direct, 76% (73%)
4. NatWest, RBS and Ulster Bank, 76% (62%)
5. Santander, 73% (63%)
6. Barclays, 72% (70%)
7. Clydesdale and Virgin Money, 68% (38%)
8. Lloyds, Bank of Scotland, Halifax, 55% (49%)
9. Co-operative Bank, 49% (54%)
10. Starling Bank, 48% (37%)
11. Metro Bank, 46% (42%)
12. Monzo, 17% (22%)
13. Danske Bank, 13% (20%)
14. AIB, 9% (10%)