Fraudsters are trying to convince people to ignore "no match" warnings when the bank account they are transferring money into does not match the name of the person they think they are paying, according to a regulator.
The Payment Systems Regulator (PSR) said it expects to see more action from financial institutions to stop scams where people are tricked into transferring money to a fraudster and to better protect and reimburse people if they do fall victim.
Recent figures show that in the first half of 2021, £355 million was lost to authorised push payment (APP) scams where people were tricked into paying criminals directly.
And as Christmas approaches, rumours of another lockdown refuse to go away forcing many people to consider gifting money by bank transfer this year rather than a present in person to family and friends.
Some banks have been introducing an added layer of protection for customers called confirmation of payee - which tells people making payments whether the account they are trying to pay into matches the name of the person they think they are paying.
As well as protecting against fraud, this can help to prevent people accidentally paying money to the wrong bank account.
The PSR said there were now more than one million confirmation of payee requests every day.
But in a document published on its website, the PSR said it had been told following a call for views: "There has been increased social engineering of victims by fraudsters to convince customers to ignore 'no match' warnings.
"In some cases, fraudsters may even use the added level of confidence offered by (confirmation of payee) to manipulate victims into sending money to mule accounts."
Money mules allow their accounts to be used by criminals to launder cash.
Some customers may also go ahead due to "click fatigue" or a lack of knowledge over how to interpret warnings, it was also suggested.
Overall, the PSR said evidence of the positive impact of confirmation of payee provided a compelling case for a wider rollout, which will give consumers better protection against fraud, prevent accidentally misdirected payments and provide greater industry protection.
It said it shared concerns that some scams continue even after a "no match" warning.
But it said its analysis had shown a continuing decrease in the number and value of scams that proceeded after such a warning.
It said: "This suggests that (confirmation of payee) may be leading to a greater number of customers relying on warnings and abandoning potentially fraudulent transactions.
"It is therefore clear to us that there is a strong case for the wider rollout of (confirmation of payee)."
The PSR also said feedback suggested a shift in scams migrating to institutions that have not yet implemented confirmation of payee.
Chris Hemsley, managing director of the PSR, said: "Confirmation of payee has proven to be an effective way to stop scams from happening, but it should be widely available - we want to see more banks, building societies and financial institutions use this service to protect their customers."
He added: "The work that has been happening to broaden the (confirmation of payee) service will mean that many more fraudulent and misdirected payments should be prevented.
"There is currently good progress being made in making the service more widely available, but we will step in if we need to, including if we think that progress is stalling."
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