What Are Banks Doing About APP Fraud Reimbursement? | Wealth Recovery Solicitors

What Are Banks Doing About APP Fraud Reimbursement?

It was recently announced that British banks will now be allowed to hold payment transfers for an additional three days, if the bank believes that a customer is being scammed. As well as this, the minimum amount for APP fraud reimbursement has increased to a maximum of £415,000 from October 2024. Whilst this is a great update, more needs to be done by the banks in not only spotting fraudulent behaviour, but the reimbursement of funds if a client has been scammed. 

APP fraud reimbursement is an area which is being particularly focused on, with regulators looking to clamp down on authorised push payment fraud, which is where people are tricked into sending and transferring money through their bank to a scammer. Banks haven’t always been the most proactive when it comes to APP fraud reimbursement, so it’s positive to see that some changes are being made. 

It’s estimated that 200,000 people fall victim to APP fraud, which is a scam that involves victims sending payments to someone who is not who they claim to be. Often, scammers will pose as the victim’s bank, or family members, in order for the victim to send them large sums of money. They target victims using fake websites or online ads or through fraudulent emails and phone calls, to bypass security checks implemented by the banks. 

With this recent announcement, let’s take a look at what banks are doing about APP fraud reimbursement and what you can do if you find yourself a victim of APP fraud. 

Will Banks Foot The Bill For APP Fraud Reimbursement? 

APP fraud is increasing year on year and, in 2022, APP fraud accounted for 40% of fraud losses. Whilst victims will suffer both emotionally and financially from this scam, banks typically are left footing the bill. It’s been estimated that TSB has refunded up to 97% of APP fraud cases under its Fraud Refund Guarantee, however, not all banks are this reactive to providing APP fraud reimbursement. 

In 2020, it was found that banks refunded £207 million for APP fraud, but the total losses equated to £479 million – meaning that just 43% of APP fraud reimbursements were granted by the banks. With the growth in APP fraud since 2020, the loss figure has likely increased. 

Although APP fraud reimbursement figures will differ from bank to bank, ultimately they will all face the same dilemma – they will either need to absorb the loss on behalf of their customers, or if they choose not to reimburse, then they risk losing the customer altogether. 

This is where we come in. If your bank is unable or unwilling to provide APP fraud reimbursement, then we can look to trace where your payment has gone and recover the funds. 

The Contingent Reimbursement Model (CRM) 

The Contingent Reimbursement Model (CRM) is a payment initiative which was designed to reimburse victims of APP fraud. Until 2019, the liability for APP fraud reimbursement was typically granted by the victim’s bank and there were no clear rules or guidance for banks to follow. As a result, banks were less likely to reimburse for APP fraud, as there was no requirement for them to do so. 

This meant that banking customers felt unprotected against APP fraud, particularly compared to other scams and payments at a time when banks were doing more to ensure that customers could bank and send payments in real time, offering no protection against APP scammers. The CRM was the banking industry’s response to dealing with APP fraud and reimbursement, and is a voluntary code which most UK banks follow, but not smaller financial institutions, such as Monzo or Revolut

Is CRM Changing? 

In 2022, it was found that just 66% of claims for APP fraud reimbursement were granted. It has long been discussed that reimbursement for APP fraud isn’t consistent, with some banks reimbursing all claims, and others paying out much less regularly. 

Although it’s clear that the CRM being a voluntary model for banks to use has helped with APP fraud reimbursement, there does need to be a more formal approach to how they are managed. There are new regulations set to be introduced this year, which look to include more financial institutions, that payment firms will need to reimburse APP fraud to all customers and that both the bank and scammer or scammer’s bank will be jointly liable for the reimbursement, paying 50% each. 

Verifying APP Fraud Identity

Identity is what lies at the heart of APP fraud and it is identity fraud and theft which leads to so many people finding themselves victims of this scam. It’s long been argued that more needs to be done by the banks when it comes to verifying identity on both sides of a transaction before any money is transferred. 

It’s believed that UK banks have verified the identities of over 98% of banking customers, and if this information were to be used, then this could not only reduce losses for banks, but help improve and enhance the reputation of the banks as well. This approach is already used in Sweden, with the country launching Bank-id in 2003. It is now the largest electronic identification system in the country, with a usage rate of around 94% within it’s 6.5 million active smartphone users. It is also backed, operated and owned by Swedish and Scandinavian banks. 


There is still a way to go when it comes to protecting against APP fraud and offering banking customers the reimbursement they deserve. The Finance Ministry is said to be publishing draft legislation regarding the newly announced guidelines which gives banks an additional 72 hours to hold a payment on top of the current end-of-business-day deadline which is in place if they believe that there are grounds to suspect dishonesty, fraud or theft with requested payments. 

This should, in theory, help prevent as much money from being transferred to APP fraudsters, with the new rules set to be in place by October 7th, 2024. However, banks still should be looking to do more when offering APP fraud reimbursements. If you’ve been the victim of APP fraud and have been unable to get a reimbursement, speak to our team today who may be able to trace and recover your lost funds. 

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