Push Payments Fraud in UK Hit $433 Million in 2023

Push payments fraud in the U.K. increased in volume last year, while declining in value.

That’s according to a report issued Thursday (Aug. 1) by the country’s Payment Systems Regulator (PSR), showing that authorized push payments (APP) fraud reached nearly £341 million ($433 million) last year, a 12% decline since 2022.

However, the volume of fraud cases rose by 12%, from 224,603 in 2022 to 252,636 last year.

“We can see some positive changes with more victims being reimbursed than in 2022,” David Geale, the PSR’s managing director, said in a news release.

“But there is still more to do — particularly for some smaller firms which have much higher rates of receiving fraud than larger firms.”

APP fraud occurs when a scammer tricks someone into sending a payment to an account outside of their control. The U.K. has been trying to crack down on these cases, and has introduced mandatory reimbursement rules for banks — scheduled to go into effect Oct. 7 — whose customers fall victim to the scam.

Under this system, banks and payment companies will be required to reimburse victims of APP fraud up to £415,000 ($528,000) for each claim.

For now, reimbursements are voluntary. Under this framework, the report shows, 67% of the money lost to APP scams was reimbursed, up from 61% in 2022. 

Despite this improvement, the report said, “there is still an inconsistent approach by firms when it comes to reimbursing victims. Currently, only the sending firm makes any reimbursement, ignoring the vital role receiving firms play in preventing scammers from accessing the U.K.’s payments systems.”

The new rules have gotten some push back from the British payments sector, which earlier this year asked regulators to hold off on imposing them for a year.

Riccardo Tordera-Ricchi, head of policy and government relations at The Payments Association, said in June that once the APP fraud reimbursement changes go into effect, “the prudential risk and requirements to participate in the U.K. payments market will increase significantly.”

“It will also result in an increase in cost and friction of real-time payments and a decrease in investment into the U.K. FinTech market due to higher risks of failure and lower profitability,” he added.

In a statement to PYMNTS, Geale argued that the rule change follows two years of “extensive consultation” with the industry, and is needed to fight a surge in APP fraud.

PYMNTS examined the new fraud reimbursement rules in March, arguing that the policy “put banks and payment firms in a tough spot.”

“The new liability placed on them incentivizes them to take measures to minimize the occurrence of such fraud, and to protect themselves from potential losses, banks might opt to revoke or restrict the option for consumers to make authorized push payments — inconveniencing their customers and restricting their ability to make payments at the same speed as their peers in other countries,” that report said.