New anti-fraud measures: unintended consequences

eskbanker

Today sees the launch of new anti-fraud measures, which should generally be a good thing, but hidden away in the small print is this gem:

Looking at giving banks more time to process payments, to allow suspicious payments to be investigated and stopping people from falling victim to fraudsters

It's often remarked on here that measures to protect the careless minority inconvenience the careful majority, so, depending on exactly how this will be framed, it could be another example of a control that does more harm than good….

https://www.gov.uk/government/news/what-the-prime-ministers-fraud-strategy-means-for-you

Band7

oh great 😭

Shakin_Steve

Depends on what 'more time' means. I could live with 24 hours, but any longer than that would take some forward planning, and a little getting used to. Plus, of course, human nature dictates that there would be a lot of panicky account checking to see if the payment had landed.

If the banks' systems needed upgrading to facilitate this possible change, you can bet they'll kick back, and ask for years to implement it😁

TiVo_Lad

So "Faster Payments" won't be any more….

Perhaps there should also be focus on receiving accounts, not just sending accounts. An account that starts receiving payments from all over the place could be classified as suspicious. Clearly there needs to be work done to protect legitimate accounts that will receive payments from many sources (Client Accounts, Intemediary Accounts, Utilities etc).

Perhaps "Nominated Account" needs to be a two-way authenticated process rather than one way?

There are many inventive ways to solve this issue; just slowing down the process isn't one of them.

redux

Most bank transactions take microseconds, though obviously the user experience is longer. How much more time does Sunak think they need?

And a political point that might be unpopular with some:

Fraud now accounts for over 40% of crime. 

Is this why the Conservative party has taken to using crime figures that exclude fraud, when they claim that crime has decreased?

TheBanker

Shakin_Steve said:

Depends on what 'more time' means. I could live with 24 hours, but any longer than that would take some forward planning, and a little getting used to. Plus, of course, human nature dictates that there would be a lot of panicky account checking to see if the payment had landed.

If the banks' systems needed upgrading to facilitate this possible change, you can bet they'll kick back, and ask for years to implement it😁

I think the banks would welcome this change, given they are the ones who suffer most of the losses.

I don't think the proposal is to slow down all Faster Payments, rather to introduce delays to allow for investigations where payments are judged to be higher risk - new payees, large amounts, and other indicators of fraud. For scams this will give the customer time to think about what they're doing, and potentially remove some of the sense of urgency that fraudsters create. It will perhaps be less disruptive than the current situation where payments get blocked in a seemingly (to the customer) random fashion. 

redux said:

Most bank transactions take microseconds, though obviously the user experience is longer. How much more time does Sunak think they need?

And a political point that might be unpopular with some:

Fraud now accounts for over 40% of crime. 

Is this why the Conservative party has taken to using crime figures that exclude fraud, when they claim that crime has decreased?

There is a focus on receiving accounts too - the Payments Regulator is proposing that where a scam occurs, liability should by default be split between the sending and receiving bank. The aim is to incentivise receiving banks to improve their monitoring of incoming transactions. 

The statement about fraud accounting for 40% of all crime is incomplete. It should read Fraud now accounts for 40% of all crime, but only 2% of police resources are tasked with investigating it. 

eskbanker

redux said:

Most bank transactions take microseconds, though obviously the user experience is longer. How much more time does Sunak think they need?

Reading up on this a bit more, I believe that it's actually the banks pushing for this - the Payment Systems Regulator consulted with the industry last year, with a view to tightening the controls around APP scams by insisting the banks accept more liability, and the industry response included a request for more processing time for suspected fraudulent transactions.

https://www.psr.org.uk/media/kzlncenx/psr-cp22-4-app-scams-reimbursement-september-2022-clean.pdf

https://www.ukfinance.org.uk/system/files/2022-12/UK Finance PSR APP Consultation Response.pdf (page 10)

Whilst PSPs can intervene, warn, and advise customers where it is believed they may be being scammed, PSPs currently have no regulatory comfort to hold the payments past D+1 or to stop the execution of that payment unless instructed by the customer to do so. We ask for changes to Reg 86 to enable PSPs to pause the execution of a payment past D+1 where there is a high risk of fraud.

dealyboy

Careful now ...

kaMelo

No wonder the banks want more processing time, potential bank losses to scams could be tens or hundreds of thousands. Potential losses due to a frustrated customer whose payment is held up for "checks", a token go away payment,

These are the (un)intended consequences of how the FCA and FOS expects banks to behave, if in any doubt stop the payment.


The silent majority being dragged down by the click happy, couldn't care less, always someone else's fault minority.

MrFrugalFever

For those of us that are rate tarts and account hop, trying to prove source of wealth/funds is going to be quite the challenge, should it be required. I wonder if there is enough human manpower to actively respond to these delayed transactions so that they can be processed in a ‘timely manner’? 

Surely a large proportion of fraud is by international monetary transactions and physical cash being deposited? Well do away with cash and scrutinise each incoming international transfer?

TheBanker

MrFrugalFever said:

For those of us that are rate tarts and account hop, trying to prove source of wealth/funds is going to be quite the challenge, should it be required. I wonder if there is enough human manpower to actively respond to these delayed transactions so that they can be processed in a ‘timely manner’? 

Surely a large proportion of fraud is by international monetary transactions and physical cash being deposited? Well do away with cash and scrutinise each incoming international transfer?

It used to be that way. Now a large proportion of fraud is due to account holders being tricked into making a Faster Payment to an account which a fraudster has access to. Not necessarily a traditional bank - Crypto exchanges and pre-paid debit cards are quite popular for this type of activity.