NEW anti-fraud rules that will affect how you transfer money between banks come into force from June 30.
The protective measures are designed to help stop customers from losing millions of pounds to bank transfer scams.
The Confirmation of Payee (CoP) law was supposed to come into play on March 31 but it was pushed back for a second time by three months because of the coronavirus outbreak.
The rules were originally supposed to be rolled out by July 2019 but were postponed by nine-months due to a second consultation period – something that experts predict cost fraud victims a collective £400,000 a day.
The new system will require the six biggest banks to alert customers when a payee name entered is different to the name registered on an account.
At the moment, banks only have to verify the account number and sort code before allowing a cash transfer to go-ahead.
How will Confirmation of Payee work?
FROM June 30, banks will have to verify the name of the person you're trying to send money to.
When making a bank transfer, after you've entered in the name, sort code and account number one of three things may happen.
- If you've used the right account holder name, you will be sent confirmation that the details match and your payment will be made.
- If the name you typed in is similar to the account holder's name then you will be told that it's close and asked to double check with the person you're trying to transfer money to.
- If the account holder's name and the one you typed in don't match, you will be issued a warning.
The rules don't mean that the bank has to block your payment – you can push ahead with the transfer anyway if you want to.
But it may mean that it will be harder to get your money back as the bank could argue that it warned you of the potential scam.
But with the new rules in place, banks will have to check the name matches the account holder's details too and alert customers if they're not the same.
Banks don't have to block the payments though and customers can choose to make it anyway, regardless of the warning.
But if they do opt to go ahead and it turns out to be a scam, it may be harder to get your money back as the bank may argue that it warned you of the risk.
So far, First Direct, Halifax, Lloyds and RBS Group (Royal Bank of Scotland and NatWest) have already introduced the rules, while Nationwide and Santander hope to have them in placeby the end of June.
The Payment Systems Regulator (PSR) – the organisation behind the scheme – hopes the regulations will reduce the amount of money lost when someone sends cash to what they think is a legitimate organisation or person, such as HMRC, but which is actually a fraudster.
The PSR estimates that the new system could prevent £145million being lost to fraud each year.
How to protect yourself from fraud
USE the following tips to protect yourself from fraudsters.
- Keep your social media accounts private – Think twice before you your share details – in particular your full date of birth, address and contacts details – all of this information can be useful to fraudsters.
- Deactivate and delete old social media profiles – Keep track of your digital footprint. If a profile was created 10 years ago, there may be personal information currently available for a fraudster to use that you’re are not aware of or you have forgotten about.
- Password protect your devices– Keep passwords complex by picking three random words, such as roverducklemon and add or split them with symbols, numbers and capitals.
- Install anti-virus software on your laptop and personal devices and keep it up to date – This will make it harder for fraudsters to access your data in the first place.
- Take care on public Wi-Fi– Fraudsters can hack or mimic them. If you’re using one, avoid accessing sensitive apps, such as mobile banking.
- Think about your offline information too – Always redirect your post when you move home and make sure your letter or mailbox is secure.
This is the amount it says is lost through payments being sent to the wrong accounts every year.
In 2018 there were 78,215 cases of individuals being conned into sending their cash to fraudsters.
A massive £228.4million was stolen and victims received just 20 per cent back.
At the Sun we have reported several cases where victims of this kind of fraud have been scammed out of thousands of pounds.
Grandmother Jo Wilson, for example, lost £40,000 life savings by fraudsters pretending to be from NatWest.
At first, the rules will only apply to the six biggest high street banks in the UK before being rolled out to all banks and building societies.
TSB has said that it will follow by October 2020.
It's worth noting though that customers will only be alerted if both banks – the one you're trying to transfer money from and to – are registered to the scheme.
The rules will only apply to faster payment and CHAPS bank transfers, with BACS being added later this year, while international payments are excluded from the scheme altogether.
Speaking about the delay caused by the pandemic, the PSR said: "We have been very clear that where the directed banks provide appropriate protection to people, we will not take any formal action in respect of delays to the introduction of CoP ahead of June 30 2020.
"We fully expect the banks to do everything they can to protect people in the meantime and implement CoP as soon as possible."
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