British Banks Split on Charging Fraud Reimbursement Fees

British lenders are reportedly divided over whether to charge scam victims under new fraud reimbursement rules.

Beginning Oct. 7, banks in the U.K. will be required to reimburse customers who fall victim to authorized push payment (APP) fraud for sums of up to 85,000 pounds.

But as the Financial Times (FT) reported Monday (Sept. 30), those new rules also allow banks and payment companies to levy a fee of 100 pounds when settling fraud claims, something that has become the matter of some debate.

Many industry figures, the report notes, see the added charge as a way to make sure customers remain vigilant against fraud.

At the same time, consumer groups have pushed back against the charges, noting that 32% of APP fraud cases involve amounts of 100 pounds or less, meaning consumers would lose money in being reimbursed.

Some banks — TSB, Nationwide, Virgin Money, Clydesdale Bank, Yorkshire Bank and AIB — told the FT they will not charge customers who become APP fraud victims.

NatWest said it might apply a fixed excess of 100 pounds to the amount reimbursed to customers, while Metro Bank and payment service providers Modulr and Zempler all said they would be charging the 100-pound fee in full.

Nicola Bannister, customer support director at TSB, said a third all fraud claims at the bank were for £100 or less, mostly from purchase fraud scams originating on social media.

“£100 can be a lot of money to somebody,” she said, arguing that other banks should be clear whether or not they plan to apply the charges.

Barclays, Lloyds, HSBC, Monzo, Starling, the Co-Operative Bank and Danske Bank have all yet to decide a final position on the issue, but will notify customers one way or the other before the new APP fraud rules go into effect.

British regulators put the reimbursement rule in place following a surge in APP fraud incidents. Data from the country’s Payment Systems Regulator (PSR) showed that APP fraud reached nearly 341 million pounds last year, a 12% drop from the prior year. However, the volume of fraud cases rose by 12% to 252,636, up from 224,603 during 2022.

“We can see some positive changes with more victims being reimbursed than in 2022,” David Geale, the PSR’s managing director, said in August. “But there is still more to do — particularly for some smaller firms which have much higher rates of receiving fraud than larger firms.”

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