Ever felt like banks sometimes freeze your funds just when you need them most? Well, it looks like they’re about to get a lot more freeze-happy! From this autumn, banks will have new powers to hold payments for up to four days if they suspect fraud, and it’s all part of a bigger plan to tackle payment scams.
The new rules, rolling out on October 7, aim to put a stop to "Authorised Push Payment" (APP) fraud—a type of scam where you approve a payment thinking it’s legitimate, only to realize later that you’ve been tricked. And with consumers losing £460 million to APP fraud last year, this couldn’t come at a better time!
Why the New Rules?
Here’s a quick breakdown:
Under the current system, banks can hold suspicious payments for only 24 hours. But with APP fraud becoming more sophisticated, that’s often not enough time to thoroughly investigate. The new legislation will give banks up to four days to dig deeper when they suspect foul play. This way, they can stop fraudsters in their tracks before your hard-earned money vanishes into the ether.
Who’s At Risk?
APP fraud comes in many shapes and sizes, but the usual suspects include:
- Romance scams: You think you’ve met your soulmate online, but it’s your wallet that ends up heartbroken.
- Purchase scams: That concert ticket deal that seemed too good to be true? It probably was.
- Investment scams: Get-rich-quick schemes that promise the world but deliver nothing except a drained bank account.
Real-Life Example
Imagine you're in the middle of a house purchase. You’re all set to transfer the down payment, but suddenly, your payment is put on hold for 72 hours due to a fraud check. Chaos ensues. This is one of the concerns raised by Gareth Richards of the Society of Licensed Conveyancers, who warned that these extended holds could wreak havoc on time-sensitive transactions, like buying a home.
But in the grand scheme of things, it’s a trade-off. Better a delayed payment than falling victim to fraud, right?
What’s in It for You?
Starting October, banks will be required to refund victims of APP fraud—unless the bank can prove you were “grossly negligent.” That means, if you’re tricked into transferring money to a scammer, you’ll most likely get your money back. However, if you ignore a bank’s warnings or fail to report the fraud promptly, you might be out of luck.
And here’s some good news: even the elderly will have an even higher level of protection, making it harder for banks to refuse a refund.
How to Protect Yourself
While the new rules give you more protection, it’s always better to avoid fraud in the first place. Here are some tips to help you stay safe:
- Verify Before You Pay: Always double-check that the request for payment is legit. If it seems even slightly suspicious, contact the person or company directly.
- Beware of Pressure Tactics: Scammers often create a sense of urgency. Take your time, and don’t let anyone rush you into making a payment.
- Keep Your Bank Informed: Report any suspicious activity to your bank immediately. The sooner they know, the better they can protect you.
- Use Secure Payment Methods: Stick to well-known payment gateways and services that offer fraud protection.
- Don’t Ignore Warning Signs: Banks are implementing systems to alert you if something seems off. If you see a warning, take it seriously!
Quick Tip
Did You Know? The Payment Systems Regulator (PSR) is leading the charge on this fraud prevention plan, and more than 480 businesses have already signed up for the scheme to help protect customers.
Ever fallen victim to a payment scam or had a close call? We’d love to hear your story. Sharing your experience could help someone else avoid the same trap!
Stay safe, stay informed,
Key Terms Explained:
- Authorised Push Payment (APP) Fraud: A type of scam where you’re tricked into authorizing a payment that you later realize is fraudulent.
- Payment Aggregators: Companies that process payments for businesses and customers, like PayPal or Stripe.
- Gross Negligence: A legal term meaning serious carelessness or lack of attention to the risks involved in a situation.
To read more, find source article here