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1.INTRODUCTION
Authorised Push Payments (APP) frauds are scams whereby countless individuals have been tricked into conveying funds to a fraudster, a crime that can have a devastating impact on the victims. APP scams are reported to be the second-largest payment fraud in the United Kingdom's finance, in terms of both the total value and the number of scams. According to a UK Finance report,1 in 2018 in the United Kingdom (UK), personal banking customers lost £228 million and business banking lost a further £126 million due to APP scams, with only £83 million recovered by the victims.
APP fraud occurs when individuals authorise their bank or other Payment Service Provider (PSP)2 to transfer funds from their account to a different account, and in the process they are tricked into transferring funds to an account that they believe is of a legitimate payee, but this account is controlled by a fraudster. APP can happen in person, online, and over the phone. In practice, most payments are completed instantly. The payment rails in the UK, such as the UK Faster Payments and CHAPS, are unable to recall these funds once they go out of a victim's accounts, leaving those individuals bearing the losses. On the other hand, banks have been reluctant to compensate individuals who have been scammed. The need to address this problem in the UK was pressing, as the scams had increased dramatically over recent years.
2.BACKGROUND TO THE NEW CODE
In September 2016, the UK Payment Systems Regulator (PSR)4 and the UK Financial Conduct Authority (FCA)5 received a super-complaint from a consumer organisation, Which?,6 that there was not enough protection for consumers from APP scams. The concern was raised and investigated by the PSR and, in December 2016, the PSR published a response, setting out core findings and recommended steps to be taken. In order to address APP scams that were identified by PSR, a programme of work was announced and was undertaken by PSR and the payments industry.
There were three main areas where the authorities concentrated their work:
* Improving the collection and publication of APP scam statistics, to address the lack of data and the scope of the problem.
* Developing a best practices standard that the PSPs should observe when...