APP fraud shifts focus beyond reimbursement

By Milan Rojan

The UK’s mandatory reimbursement regime for authorised push payment (APP) fraud has returned the majority of eligible losses to victims, but growing fraud losses are prompting renewed debate about whether reimbursement alone is enough to tackle the problem.

According to the latest data from the Payment Systems Regulator (PSR), 89% of in-scope APP fraud losses have been reimbursed during the first 15 months of the mandatory reimbursement framework. The figures indicate continued support for fraud victims, with claim volumes declining and consumer caution rejections remaining relatively low.

However, the data comes as UK Finance has reported a continued rise in APP fraud losses, highlighting the increasing sophistication of social engineering scams targeting consumers and businesses.

Jonathan Frost, Director of Global Advisory for EMEA at BioCatch, said, “Viewed in isolation, the latest PSR figures paint a positive picture, with claim volumes falling and consumer caution rejections remaining low. However, reimbursement is not the same as prevention. APP losses are continuing to rise, and the uncomfortable reality is that criminals are extracting more money from victims through increasingly sophisticated social engineering scams.”

Industry attention is now turning to the independent review of the PSR’s mandatory reimbursement regime, which is expected to assess the framework’s effectiveness and long-term impact.

Frost argued that a key measure of success should be whether less money ultimately reaches criminal networks rather than reimbursement rates alone. He also highlighted the need for stronger collaboration across financial institutions to disrupt fraud earlier in the payment journey.

The growing use of artificial intelligence is adding a further layer of complexity. According to Frost, technologies such as deepfakes, hyper-personalised scam campaigns and automated fraud operations are enabling criminals to scale attacks more efficiently.

“As automation grows, the challenge for banks will increasingly be distinguishing between human and machine behaviour,” he said.

The latest figures underscore the broader challenge facing the industry as regulators, banks and technology providers seek to balance customer protection, fraud prevention and accountability across the payments ecosystem.