Last October, the Authorised Push Payment (APP) fraud reimbursement requirement was introduced, requiring banks to compensate APP scam victims up to £85,000. A year since being introduced, what impact has the scheme had on fraud numbers, and how have payment firms been affected?
Volume Claims - up or down?
With the introduction of the mandatory reimbursement scheme, one might reasonably reflect that it would lead to an increase in the volumes of claims being made. However, recent data published by the Payment Systems Regulator (PSR) showed that the volume of claims was down on the previous reporting period, with 126,000 claims made, 15% lower than the same period the year before.
This fall in APP cases is backed up by UK Finance’s half-year fraud report. This report looks at the amount of fraud and scams reported by its members in the first half of 2025. UK Finance members reported that APP fraud fell by eight per cent to 110,747.
The reduction in claims may be a result of firms investing in fraud prevention systems and controls ahead of the reimbursement scheme coming into effect. With a 50:50 liability split between sending and receiving banks to reimburse victims for losses up to £85,000, the incentive to prevent losses in the first instance will certainly have been a factor.
Awareness and trust - customers' views
Looking at the way customers are treated in the reimbursement process, there has been a high level of claims being upheld, and the customer receiving the funds back. The PSR report states that 88% of the money lost and claimed back was returned to customers. And the time it takes for customers to receive the funds back shows that the majority of claims (84%) are settled within one week.
Whilst this is good news for those affected customers, they have still been the victim of a fraud or scam. What perception do they then have of their bank? The PSR released findings from its APP fraud survey of consumers that looked at levels of trust from victims. The main takeaway here is that victims’ levels of trust in their bank have increased, with half of the victims who were reimbursed saying they trusted their bank more. This level of trust goes down, perhaps understandably, with victims who were not reimbursed, with just 1 in 3 trusting their bank more.
There is also a decrease in trust for social media platforms from victims, primarily as these platforms are the originators of a large percentage of fraudulent behaviours. The UK Finance report states that 66% of its members' APP fraud cases started on online platforms, and 17% on telecom platforms. Meanwhile, the PSR report found that 38% of victims trusted social media platforms less.
Awareness of the reimbursement scheme remains low, the PSR asked specifically about people’s awareness of the policy, with 49% of victims stating they did not attempt to claim reimbursement, and 71% said they were unaware of the policy altogether. Whilst the general public’s awareness of the reimbursement scheme is low, this is perhaps to be expected in instances where a customer has yet to be the victim of APP fraud. The awareness levels and protections the scheme brings become much more important once a fraud has occurred.
What are the main APP fraud typologies?
Purchase scams make up a large proportion of PP fraud claims. This is where a person or entity illegally obtains goods or services by making fraudulent transactions, which could typically involve credit card fraud or identity theft, to make a purchase without the intention to pay for it. The findings from the PSR report showed that 60% of APP fraud victims fell victim to purchase fraud. Similarly, the data from UK Finance members found that 72% of APP cases were purchase scams.
The other main typology is Investment scams. This is where victims are tricked into moving money into fictitious funds or investments. These could be fake social media platform investment groups, victims tricked into buying cryptocurrency through fake platforms, or recovery room scams – where victims of fraud are then targeted by fake police or recovery agencies and further exploited. The UK Finance report found that £98m was stolen using these methods, a 55% increase on the previous year.
What regulatory activity is happening?
The FCA has understandably been paying significant focus on APP fraud rates, and in particular, how firms are handling the growing issue in the UK. Noticeably, the FCA has been using the data from the PSR to determine banks and PSPs on the other side of the transactions for the named banks in the PSR reporting.
The FCA has then been contacting some of those firms to enquire around APP fraud rates and look for explanations around fraud volumes, values and control frameworks. This is certainly an area of focus for the regulator at the moment, which we have seen with firms. The focus from the FCA is certainly related to driving down APP fraud rates based on the numbers they have seen from the PSR.
One firm suffered a high level of fraudulent activity during the launch of a new product, which ultimately led to it suspending its UK services. A number of firms we work with have received continued interest and requests from the FCA to demonstrate how they are handling APP fraud transactions. If firms have not already done so, making sure that fraud frameworks are clearly documented, assessed and functioning appropriately will mean they are prepared for any regulatory scrutiny.
Key Takeaways for Firms
Based on what we are seeing, there are immediate considerations for firms relating to APP fraud reimbursement:
Making sure that fraud rules are fit for purpose, are proactive in detection and consider wider connections across products and customers. Independent testing of fraud roles can provide validation and recommendations for areas for improvement.
2. Conduct risk assessments of fraud frameworks
Taking time to assess fraud control frameworks is key to understanding if firms are keeping up with key fraud risks, including APP fraud. This can be done internally or through an independent audit. Partner firms are increasingly looking for firms to demonstrate that systems and controls for fraud prevention and detection are in place.
3. Enhance communications to customers
Educating customers on what APP fraud is and how they can help prevent it is part of increasing awareness to identify fraud before it occurs. Consider what messaging and activities can be undertaken to raise awareness to customers, and reinforce over a sustained period to embed the knowledge.
4. Review monitoring and testing activities
Continuous monitoring provides real-time visibility into transactions and user behaviour, reviewing processes such as risk scoring, alert triggers, trend and behavioural analysis can improve the effectiveness of these controls.
Testing also plays a key part in ongoing effectiveness, and having a regular program of testing targeted at fraud controls will assist in maintaining that effectiveness. Running fraud scenarios to see how systems are operating, looking for any potential weaknesses in payment systems.
Meet the expert
James Dodsworth, Senior Manager and Sanctions Lead 
James has worked in financial crime compliance across a range of sectors and firms for over 20 years. As a certified fraud investigator, James has experience in leading sanctions programmes, including assessing and remediating risks, and creating and delivering training. James also performs reviews and testing of firms' sanctions systems and tools to evaluate effectiveness.