APP Scam Refund Regulations Extended To Chaps

The US Payment Systems Regulator is looking into expanding its scam reimbursement rules to cover transactions made through the high-value payments network of Chaps.

In June 2023, the payment systems regulator released its policy mandating payment companies to compensate victims of Authorized Push Payment (APP) scams. These scams primarily occur through transactions conducted via the Faster Payment System (FPS), where most of these fraudulent activities occur.

Bank Of England Establishes Rules Concerning Scam Disbursement

The Bank of England has already set rules about getting money back for banks and payment companies in CHAPS. These rules were recently established, while the PSR’s different policy for getting money back from APP will start on 7 October.

The Payment Systems Regulator’s rules were revealed in December 2023. The reimbursement will be divided into two parts so that the sending company will only pay fifty percent of the returning amount.

Making the rules apply to CHAPS would greatly expand their coverage. CHAPS is a UK payment system that settles transactions in real-time. It is a same-day system that processes high-value wholesale payments and urgent lower-value payments.

The Head of Policy at Payment Systems Regulator, Kate Fitzgerald, revealed that it’s vital to make the operations of fraudsters difficult. Offering uniform incentives across several payment systems is an important step to take to ensure that scam is battled head-on.

Kate also said that the regulator’s initiative on APP scams is pioneering. It will aid the closure of existing gaps and ensure more payment companies across systems are assisted in preventing fraud from happening. It also aims to protect victims of these scams.

The Regulator Promises To Offer Customers With Consistent Protection Against Scam

The Payment Systems Regulator trusts the decision taken to follow the Bank of England’s initiative and adopt the APP fraud regulations across CHAPS and FPS. It promises to provide more consistent protection to customers across the two leading payment systems.

The regulator says it will treat CHAPS like FPS as much as possible. It believes that expanding the rules will encourage payment companies to fight scams and make it less likely for criminals to switch from FPS to CHAPS for taking fraudulent actions.

According to some major payments leaders, scam risks have risen of late. For instance, Revolut, TSB, and Lloyds have all raised alarm about the potential rise of scams. They revealed that scammers often use social media platforms to perpetrate these crimes.

These new regulations have given payment companies a new situation to deal with. Christine Reisman, who is the Managing Director at Protiviti, stated last month that payment companies will need to use risk-based methods and internal plans to adjust to these changes.