UK APP fraud refunds reach GBP £112m, but scams still rising

The first anniversary of the UK's mandatory Authorised Push Payment (APP) fraud reimbursement regime has been marked with renewed concern from industry experts over persistent fraud levels despite high rates of victim compensation.

Under the Payment Systems Regulator's (PSR) rules, banks are required to reimburse victims of APP fraud, where individuals are tricked into sending money to criminals. The latest figures indicate that 88% of losses-equating to GBP £112 million-have been returned to victims since the introduction of the policy. However, there was a reported increase in the total value of claims from the first to the second quarter of 2025.

Persistent fraud

Silvija Krupena, Director of the Financial Intelligence Unit at RedCompass Labs, raised concerns that while the policy has improved victim compensation, it has not curtailed criminal activity or reduced fraud volumes.

"A year into the UK's mandatory APP reimbursement regime, the headlines of high refund rates may look impressive. But this isn't evidence that fraud is under control; if anything, it's evidence that we've built an expensive refund machine. Fraud volumes remain high, and criminals are still walking away with the same money; it's just being reimbursed from banks' pockets instead of the victims.

Before the rule came into force, around 62% of victims under the voluntary model were reimbursed. So yes, the safety net has widened, but reimbursement is not prevention. The rule has shifted financial liability, not criminal behaviour. Until accountability is shared across the ecosystem of banks, tech platforms, telecoms, and law enforcement, we'll keep recycling losses instead of stopping fraud at its source."

Krupena's remarks highlight the ongoing debate over the effectiveness of the reimbursement regime in discouraging fraudsters. Before the mandatory scheme, roughly 62% of affected customers were reimbursed under the previous voluntary arrangements.

Calls for prevention

Tom Peacock, Director of Global Fraud Intelligence at BioCatch, acknowledged the enhanced consumer protection the regime provides but cautioned that more must be done to tackle fraud before it occurs. Peacock noted that PSR data points to a 15% rise in APP fraud from Q1 to Q2 2025, a sign that the policy has not deterred criminal activity.

"The PSR's mandatory reimbursement requirements have undoubtedly strengthened consumer protection, returning millions to victims and creating an incentive for banks to set up and invest in better fraud and financial crime detection.

The policy has thus far struggled, however, to stop the underlying crime. PSR data shows a 15% rise in APP fraud between Q1 and Q2 of 2025, suggesting criminals remain undeterred.

Preventing scams before the transaction occurs must be the goal. This requires deploying better fraud detection tools and behavioural technology to decrease APP losses, cutting off mule accounts that enable such fraud, and engaging in meaningful cross-sector collaboration between regulators, banks and tech firms.

The forthcoming independent review of the reimbursement limit will reveal how the UK intends to balance consumer protection, fraud prevention, and enforcing accountability. An emphasis on a more proactive, intelligence-led approach will be crucial in disrupting the scam economy at its source."

Peacock emphasised the need for advanced technology such as behavioural biometrics and effective data sharing across sectors to intercept scams before funds are lost, as well as identifying and closing accounts used to move stolen money.

Debate over accountability

Both Krupena and Peacock pointed to the need for greater cross-industry collaboration and a rebalancing of responsibility for fighting fraud. Krupena advocated for a model whereby banks, technology platforms, telecommunications companies, and law enforcement agencies share accountability.

Peacock suggested the upcoming review of reimbursement limits would act as a test for the UK's legislative and regulatory approach, balancing the need to protect consumers with the imperative to reduce overall fraud rates.

The findings and commentary come as industry, consumers, and policymakers continue to debate the long-term effects of the reimbursement regime. The discussion is particularly relevant given that while many victims now receive compensation, the root cause of rising APP fraud remains to be addressed at scale.