- Banks can hold questionable payments for up to 72 hours to reduce fraud
- Customers must be refunded if a valid transaction is delayed
- New rules aim to combat the rising fraud problem in the UK
Banks will be able to hold a questionable payment for extended periods, but they will be required to refund clients who suffer a loss if the transaction is valid.
Banks could be granted more time to analyze questionable transfers to reduce fraud.
The Treasury has stated that proposed new laws will allow banks to halt transactions for up to 72 hours if there are reasonable reasons to believe a payment is fraudulent.
Banks must process or refuse a payment by the end of the following business day.
The proposal, which supports the banking industry’s trade association, comes after a dispute over the maximum amount a bank or payment processor must reimburse victims of the most prevalent fraud, approved push payments.
This occurs when individuals or businesses are duped into wiring money to a fraudster’s account.
Banks successfully campaigned for a lower ceiling, ultimately established at £85,000 per claim. It goes into effect on Monday.
The government stated that the proposed increased powers to withhold payments would better assist banks in reducing the estimated £460 million lost to fraud in the previous year.
It accounts for over one-third of all reported crimes in England and Wales, including losses from purchase and romantic scams.
According to the proposed guidelines, if a bank finds evidence that a payment is fraudulent, it must notify the consumer of the delay and explain what it must do to unblock it.
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Banks would also be required to repay clients for any interest or late payment fees that may arise from delays.
According to Tulip Siddiq, the Treasury’s economic secretary, scammers steal hundreds of millions of pounds every year, targeting vulnerable areas and damaging ordinary people’s lives.
We need to protect these people better, so we’re giving banks more time to analyze suspicious transfers and break the criminal spell that scammers cast.
According to Ben Donaldson, managing director of economic crime at the trade association UK Finance, the additional time will allow payment service providers to contact at-risk clients.
He said this could perhaps lessen the psychological impact that these terrible crimes can cause while also preventing money from reaching criminals’ hands.
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