TSB Leads in Refunding Fraud Victims with 94% Claims Paid, Monzo at 6%

Fraudsters have long been a plague on the banking industry, tricking customers into making payments to them under false pretenses. A new report from the Payment Systems Regulator, or PSR, has laid out stark differences in how UK banks handle these authorized push payment (APP) scams.


TSB Shows Strong Customer Support


The PSR’s findings revealed TSB Bank as a leading institution in defending its customers against APP fraud. TSB reimbursed 94% of all APP scam cases reported in 2022, making it the most supportive bank in the UK for fraud victims.

“We are dedicated to supporting our customers in the fight against fraud. Our high reimbursement rates reflect this commitment,” remarked a TSB spokesperson.


Monzo’s Approach Questioned


On the other end of the spectrum sits Monzo Bank, with only 6% of APP scam cases fully reimbursed. The digital bank has faced criticism for its handling of such cases, with a noticeable difference in their approach to fraud reimbursements compared to TSB.

Ashley Hart, the director of fraud at Monzo, explained their position: “The key to combating APP fraud is prevention. We’ve focused our efforts on innovative technology to protect our customers, particularly from purchase scams originating on social media.”


The Extent of the Issue


Banks are generally expected to refund customers’ losses, except in instances of gross negligence. However, the report indicates that not all banks are meeting these expectations. Nationwide follows TSB, returning 78% of losses, whereas AIB Group only reimbursed 10% of APP fraud losses to its customers.

Nationwide Building Society and Barclays also emerged as institutions making significant efforts to reimburse customers, with 91% and 79% of cases fully reimbursed, respectively.


Disproportionate Effects on Banks


Metro Bank and Starling Bank were also highlighted for the frequency with which their customers experienced APP fraud. The PSR report found that these banks had a notably high number of APP fraud transactions per million.



Upcoming Mandatory Reimbursement Rules


In response to the varying levels of bank support, the PSR is enacting mandatory reimbursement rules in 2024 to standardize protection across all payment firms.

Chris Hemsley, Managing Director of the PSR, emphasized the importance of this move: “Mandatory reimbursement rules will create a fair and consistent approach to APP fraud protection for consumers across all banks.”


Publishing Data for Transparency


In line with PSR’s commitment to transparency, directed payment firms will publish detailed information on their handling of APP scams within 20 days, allowing customers to make more informed decisions.

The PSR is collecting data on APP fraud to present a clearer picture of this issue and to inform future regulatory actions. The report underlines the need for a collective effort from banks and social media platforms to prevent scams and protect consumers effectively.


Consumer Advocacy Groups Weigh In


Consumer groups have praised the PSR’s move to make this data public. Rocio Concha, policy director at Which?, highlighted the need for banks to stop blaming victims and take a more active role in preventing and addressing fraud.

“It’s essential for banks to improve their prevention strategies and treat fraud victims fairly,” Concha stated, backing the PSR’s new transparency approach.

With fraud losses reaching staggering amounts, the PSR’s report is a call to action for UK banks. While TSB leads by example, the report points out that there is much work to be done before the mandatory reimbursement scheme comes into effect. As the banking industry prepares for this shift, it is hoped that all institutions will step up their efforts to protect consumers from the persistent threat of APP fraud.