Banks are to be given an extra three days to investigate potentially fraudulent transfers under new proposals put forward by the British government.
In an attempt to reduce incidences of fraud, the current power to delay a transaction by 24 hours is being quadrupled to give banks more time to check into suspicious money movements.
In a statement, the government said to minimise the impact on legitimate one-off purchases or movements such as house sales, a “two-stage test” is being introduced to delay a payment.
Initially, this will involve having reasonable grounds to believe a payment is fraudulent and secondly if it will take more than 24 hours to contact a customer about a suspicious payment.
Customers lost £485 million through these authorised push payment scams or APPs in 2022, according to UK Finance.
Methods scammers use include texts purportedly from close relatives saying they need cash urgently, known as ‘Hello Mum’ frauds that encourage people to send money quickly.
Push payment fraud involves criminals deceiving victims into initiating and authorising a transaction, such as “hello Mum, need cash” texts to parents on WhatsApp that purport to be from their children.
Firms will use the time to contact the customer and law enforcement agencies.
Bim Afolami, economic secretary to the Treasury, said: “Fraudsters spin whole webs of lies and fabricate all sorts of things to convince people to send them money – this legislation will give banks, other payment service providers and law enforcement more time to get in touch with victims and break the fraudster’s spell before money is sent.
“The Government is absolutely committed to tackling fraud and recognises the impact of this devastating crime on victims – this legislation is another tool in our arsenal to fight fraud,” he added.
The bill is expected to come into force in October alongside other measures to fight APP fraud.