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Scam – New Payments Service Regulation in UK

https://www.reuters.com/world/uk/uks-payments-regulator-lays-down-new-norms-tackle-fraud-2023-06-07/

 







 Britain's Payment Systems Regulator (PSR) said on Wednesday it has made it mandatory for banks and payment firms to reimburse victims of online bank fraud within five days, in cases where users at a business send money to a bank account controlled by fraudsters.

 



Thousands of people have seen their savings swept away in recent years by an unprecedented wave of fake online bank transactions hitting Britain, called authorized push payment (APP) fraud.

The PSR said the new rules will be imposed on the Faster Payments system, where the vast majority of APP fraud has occurred so far, with the reimbursement requirements coming into force next year.

The regulator also said that all payment firms will be incentivised to take action, with both sending and receiving firms equally splitting the reimbursement costs.

 


 

What does this mean

1. Fraudster Charles opens a  Cashapp account in UK.

2. He steals information on Diana’s Barclays bank account and adds this stolen  bank to his cashapp account



3. Charles now adds Diana's  stolen bank on his Cashapp account 

4. He then uses Diana's bank to send money  300 pounds via p2p to his friend Camilla.

5. At a later Diana checks her account and sees she has been cheated and files a compliant with Barcxlays

6. Previously before this regulation went live. Barclays would open an unauth claim on for 300 pounds with Cashapp. Cashapp would take the time it needs to investigate and have to pay the 300 pounbds back to Barclay who would maybe a month to complete the investigation then give it back to Diana

7. After this regulation goes live

-         a.  Cashapp and Barclays would need to complete the investigation within 5 days of Diana filing the complaint

-         b.  For the 300 pounds that needed to be paid back to Diana Cashapp would need to pay 150 pounds and Barclay would be responsible for paying 150 pounds

 

I love this regulation as it is going to force the whole ecosystem to build more security. PSR is telling Barclays why did you not protect Diana’s bank account information from getting stolen , so you bear half the loss. PSR is telling Cashapp 0- hey why did you not detect Charles as a fraudster on your platform and why did to allow him to use Diana’s stolen bank on your platform

 

Fintechs and Banks gear up,  PSR will not allow you to write off Scam Disputes and not pay the customers.  So start gearing up

 





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