PSR’s Mandatory Reimbursement for APP Fraud - What is it?
On the 7th October 2024 the Payment Service Regulator (PSR) implemented a landmark piece of regulation that gave increased protection to Authorised Push Payment (APP) fraud victims who have transferred money via a UK bank transfer to a scam.
The PSR Mandatory Reimbursement covers payments made from any UK Payment Service Provider (PSP) to another UK PSP. PSPs include UK banks or Electronic Money Institutions (EMIs) such as Revolut or Wise. For simplicity, throughout this article we are going to refer simply to “banks” but really we are talking about all PSPs.
As it stands, you will be covered for up to £85k per scam claim. You are only covered if the payment was a UK to UK bank transfer and it was made on or after 7 October 2024. If you do not meet this criteria, there are other options for reimbursement that we discuss further down.
Does Mandatory Reimbursement mean banks will refund scammed money?
In short answer, victims stand a better chance of recovering money, but this is not guaranteed.
Even if you are covered, the bank may still refuse to reimburse you under certain circumstances (more on this further down) and this can be challenged too.
What PSPs are covered by Mandatory Reimbursement?
It covers all Payment Service Providers (over 900), which include HSBC, Lloyds, Barclays, Santander, Revolut, Wise, etc. Your payments are covered if you made a payment over the Faster Payment network, which is a common but specific type of bank transfer. If you are a business, some additional criteria apply.
How much you are covered for?
You are covered up to £85k of losses per scam claim, per bank you sent the money from. For example, if you sent £85k from your Lloyds account and £85k from your Barclays account to the same scam, you’d be covered for £170k. If you sent all the money from the same bank, you’d only get £85k. A “scam claim” is a sequence of payments made as part of the same scam.
Very importantly, if you lost more than £85k, you do have other options which we’ve set out at the end of this article. Your bank or the bank you sent the money to may still have failed in other obligations to stop fraud and you can fight them on that. You can use Refundee to do this for you.
Banks are also allowed to charge a £100 excess. It is optional whether they charge this but if they do, it effectively means that you are not covered for the first £100 of any loss.
Why can a bank refuse a refund under PSR Mandatory Reimbursement?
Banks have a history of failing to reimburse scam victims when they should have as it can cost them a lot of money. If a bank tells you that you are not covered or that you aren’t going to be reimbursed, you shouldn’t necessarily take that at face value. After a scam, people often feel low on confidence or feel it’s their own fault. Don’t let them take advantage of that.
There are a number of reasons they will try to say no to you. There are some valid reasons where they can refuse reimbursement, but the banks will often refuse reimbursement unfairly. Even in these cases, Refundee is successful against banks, which shows there is still a huge problem with banks failing to reimburse people when they should have.
Below are the reasons why they might say ‘no’ to you.
It’s a civil matter and not a scam
The PSR mandatory reimbursement rules, like other fraud protection, only cover scams and not civil disputes. Because it only applies to scams, banks have historically and unfairly refused to reimburse people by telling them that what has happened to them is in fact not a scam or that there isn’t enough evidence. We’ve seen them say this even in extreme cases where the evidence is overwhelming.
If you know something is fraud, you shouldn’t let the banks refuse reimbursement with this excuse.
You did not meet the “standard of caution” expected and acted with gross negligence
This is where we expect that most people will be unfairly denied reimbursement.
The below are four ways the bank can refuse to give you a scam refund under the PSR Mandatory Reimbursement rules.
1. You did not have regard to warnings
If you did not have regard to interventions made by the bank or the police where they warned you very clearly that this was a scam, you may be denied a refund for the money you lost in the scam. But just because the bank or the police spoke to you, does not mean that you can automatically be denied a refund.
The warning needs to be so significant that you acted with a “significant degree of carelessness” in ignoring it. We expect that banks and particularly EMIs will continue to use generic, ineffective, and automated in-app warning screens to deny reimbursement. The new regulation makes it clear that these are unlikely to be sufficient to deny reimbursement. The banks know that these warnings and interventions often have little chance of exposing and preventing a potential APP scam. If you have been denied a scam refund under this PSR Mandatory Reimbursement rule, you can challenge it.
2. You did not report the fraud to the bank within a reasonable time
Generally it’s expected that you report the scam within 13 months of the last payment you made. If you didn’t report it within this time, then you simply need a reasonable explanation why you didn't. For example, it could have been a long running scam that went on for many years so you only found out recently.
3. You need to respond to reasonable and proportionate information requests from the bank when you report the fraud
It’s understandable that a bank would like to find out more about what happened and to seek out evidence that you’ve been the victim of a scam. If you didn’t engage with reasonable information requests, you can be refused reimbursement.
4. You need to consent to the scam being reported to the police
When you make a claim, you need to have either reported it to the police or consent to the bank reporting it unless there is a very good reason you don’t want them to. You can find details on how to report it to Action Fraud here.
If you’ve been denied for any of the above reasons, you should be prepared to challenge it.
Vulnerability and mandatory reimbursement
If you can demonstrate that you were vulnerable at the time the scam took place, you should be reimbursed regardless of any reason the bank tries to say no to you. The regulation defines vulnerability as:
“Someone who, due to their personal circumstances, is especially susceptible to harm – particularly when a firm is not acting with appropriate levels of care.”
You will therefore need to provide evidence of your vulnerability at the time.
This is a really important part of the PSR Mandatory Reimbursement rules as scam victims who are vulnerable cannot be denied a scam refund on the above four grounds.
When you fall victim to a scam, there are often temporary or permanent circumstances that contributed to the scam. For example, we often see people lose money to investment scams after inheriting money due to a parent passing away. The impact of the bereavement often left them vulnerable during the period they invested, and could mean they are more likely to receive a refund under the new PSR rules.
What if you lost more than £85k?
If you sent the money from more than one bank or EMI you have an £85k limit for each of those institutions.
However, if you’ve sent more than £85k from one, you still do have options to try and seek reimbursement. The same options apply as those who are not covered by the mandatory reimbursement rules at all (below).
What if you are not covered by PSR Mandatory Reimbursement Rules? (You paid the scammers via a different method or paid before 7 October 2024?)
The rules are not retrospective so do not apply to payments before 7 October 2024. However, don’t worry, there are usually other options for you depending on how you paid, when you paid, and how much. If you want to discuss whether you can get a scam refund before this date, you can fill in our fraud refund claim form for a free, no obligation consultation.
Bank transfers to another UK account before 7th October 2024
Prior to the new mandatory reimbursement rules that came into place on 7th October 2024, most UK banks were signed up to the Contingent Reimbursement Model Code (CRM code). This covers all UK to UK bank transfers from 28 May 2019 up until the implementation of the new PSR rules. While not quite as strong as the Mandatory Reimbursement rules it is still very strong protection and, unlike the new PSR rules, there is no limit to how much you can be reimbursed. You can find a full list of banks that were signed up here.
If you sent money to a UK bank (even if it was from overseas) you can raise a claim against the recipient of the money. This will also be an option for people that lost more than £85k and were only able to claim the £85k via the Mandatory Reimbursement rules.
Non UK transfers, payments to crypto or payments from banks not signed up to the CRM
Banks and Electronic Money Institutions (EMIs) such as Revolut or Wise have an obligation to monitor your accounts for signs that you might be making payments to a scammer. Therefore, if you are exhibiting behaviour that is highly unusual for you, they are expected to question what you are doing and provide you with relevant information or warnings if appropriate. You can take a case against the bank/EMI you sent the money from or the one you sent it to.
If the bank or EMI failed to protect you, they can be held liable for all or some of your loss. In this case, you will very rarely be offered reimbursement up front and you’ll need to fight for your money by raising a complaint and taking the bank/EMI to the Financial Ombudsman Service. Refundee can do this for you or you can do it yourself.
How the process works if you want to get your money back
As soon as you know it’s fraud you should be reporting this to the bank you sent the money from, as well as to Action Fraud.
If you’ve done this and you haven’t been reimbursed, you lost more than £85k or you are not covered by Mandatory Reimbursement rules, you should consider whether the refusal to reimburse you was unfair.
You can raise a complaint against them, or Refundee can help you get your money back. To do this you can fill in our fraud refund claim form for a free consultation. Our fee is 15% plus VAT on anything that we get back, and we don't charge anything if we are not successful. For larger cases, the fee is subject to a maximum of £10k plus VAT per case.
Remember, you don’t need to use a company like Refundee - you could work your case yourself for free! If you’d like to get a refund yourself. You can do this by following the ‘Claim Yourself’ guide.
