New Rules on Bank Transfer Scams: Your Money, Your Protection

October 16, 2024

New Rules on Bank Transfer Scams: What It Means for Your Money

Have you ever worried about falling victim to bank transfer scams? Well, here’s some good news. On October 7, 2024, new rules came into play that could make a big difference if you ever find yourself in this unfortunate situation.

What’s Changing?

From October 7, if you’re tricked into transferring money to a scammer, your bank may now be required to refund you in most cases. This applies to all banks, building societies, and even e-money firms and savings providers. It’s a big step forward in consumer protection.

But before you breathe a sigh of relief and let your guard down, there are a few things you should know.

What payment types do the new rules cover?

The new rules will only cover scams where you’ve sent the money by UK bank transfer, either by Faster Payments or CHAPS. Other payment types, including card, cash and cheque ARE NOT covered.

Payments made before October 7 2024 are also NOT covered. Instead they would be handled under the old voluntary Contingent Reimbursement Model Code (CRM Code). Most, but not all, banks were signed up to the CRM Code.

Is there a limit on how much I can claim back from my bank?

There is a refund limit of £85,000 per claim which for most of us, is more than enough to cover any potential losses.

In fact, the regulators say this limit will cover 99.8% of all scam cases.

£100 excess rule

However, banks have the option to charge an excess of up to £100 on each claim.

This is a bit like your car insurance excess. Some banks, like Nationwide, TSB, and Virgin Money, have already said they won’t charge this excess. Others might, depending on the circumstances. It’s worth checking with your bank to see where they stand on this.

Can Your Claim Be Rejected?

Banks can reject your claim, but only if they can prove you were “grossly negligent”. This is a pretty high bar, and according to the regulators, it should only affect a small minority of cases.

To stay on the safe side, always pay attention to any warnings your bank gives you, report suspected scams immediately and be willing to share information to help assess your claim. It’s also important to consent to fraud details being reported to the police. Think of it as doing your part in the fight against fraud.

If your bank rejects your claim you can raise a formal complaint and if you are unhappy with its response you can ask the Financial Ombudsman Service to look at your case.

What About Vulnerable Customers?

If you’re considered vulnerable, you’re given extra protection. You won’t be charged the £100 excess, and the standards for judging your actions will be more lenient. Banks will assess vulnerability on a case-by-case basis, taking into account all the facts around your claim.

What If You Fall Victim to a Bank Transfer Scam?

If you think you’ve been scammed, time is of the essence. Here’s what you need to do:

First things first, cut all communication with the scammer. If you’re on the phone, hang up.

Then, get in touch with your bank right away. Use the number on the back of your card or dial 159. This hotline number is operated by Stop Scams UK and will connect you directly to your bank’s fraud team.

Your bank will usually process your refund within five working days, but complex cases might take up to 35 days. Patience is key here.

What are bank transfer scams?

Bank Transfer scams – also known as Authorised Push Payment (APP) Fraud – happen when people get tricked into sending money from their account to a fraudster’s.

Common examples of bank transfer scams include:

• Purchase scams
• Romance scams
• Impersonation scams
• Investment scams 
• Spoofing scams

These types of scams are often incredibly sophisticated and can be very convincing and easy to fall for.

In 2023 alone, these fraudsters managed to swindle a whopping £459.7 million from unsuspecting individuals and businesses in the UK. It’s a sobering thought, isn’t it? But here’s the real kicker – only about 62% of that money found its way back to the victims.

That’s where these new rules come in, aiming to tip the scales back in favour of the consumer.

The Bigger Picture

These new rules are part of a broader effort to combat bank transfer scams. By the end of this month, almost all payment firms in the UK will be part of the ‘Confirmation of Payee’ scheme. This nifty system lets you know if the name of the person you’re sending money to doesn’t match the actual name on the account. It’s like a final safety check before you hit that ‘send’ button.

The government is also giving banks the power to delay suspicious payments by up to 72 hours. It might be a bit inconvenient if you’re in a hurry, but it could save you from losing your hard-earned cash to a scammer.

Stay Vigilant, Stay Safe

While these new rules offer greater protection, it’s still crucial to keep your wits about you when making payments. If something seems too good to be true, it probably is. Trust your instincts, and don’t be afraid to take a step back and think twice before transferring money.

Remember, your money is your hard-earned cash. These new rules are here to help protect it, but the first line of defence is always you. Stay safe out there!

Since changes to reimbursement rules in 2024, the way some scam claims are assessed has evolved. You can find an overview of your options and how different types of claims are handled in our guide to scam and fraud claims.