TSB has warned that a proposed fraud refund scheme could exclude victims of social media scams on the likes of Facebook, Instagram and WhatsApp. 

The major bank has issued a warning about the Payment Systems Regulator’s proposed refund mechanism which is due to be introduced next year. 

The plans would allow banks to adopt a £100 threshold which TSB says could lead to around a quarter of fraud victims being denied reimbursement. 

The Northern Echo: TSB has warned that a quarter of fraud victims could be excluded by the introduction of a £100 threshold. (PA)TSB has warned that a quarter of fraud victims could be excluded by the introduction of a £100 threshold. (PA) (Image: PA)

The banking company has called on the regulator to also reconsider the plans for a £35 excess fee per claim since this would disproportionately impact financially vulnerable people amid a cost-of-living crisis. 

Quarter of fraud victims may be excluded by £100 threshold, TSB warns

Cases under £100 account for a small amount of overall fraud losses – at one percent, according to the latest fraud data from the UK Financial Investments Limited.

This equates to a projected £5 million stolen from UK households every year on current fraud rates. 

TSB has analysed the types of fraud that fall under the proposed £100 threshold. 

According to its data, Purchase Fraud is a key driver of fraud across the industry and accounts for over two-fifths (44%) of all sub-£100 fraud cases. 

A significant number of consumers who have fallen victim to social media scams could be excluded if a £100 threshold is applied, TB has warned.

Meta-owned platforms (Facebook, Instagram and WhatsApp) account for four fifths (80%) of all purchase fraud at TSB alone.

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Additionally, 70% of push-payment fraud starts on online platforms, according to UK Finance.

Paul Davis, Director of Fraud Prevention, TSB said:  “We welcome these moves by government and regulators to increase customer protection from Fraud. However, many people simply cannot afford losing £100 to fraud – especially in the current economic climate – and deserve to be protected from increasingly complex scams that often take place on social media sites.  

“TSB’s Fraud Refund Guarantee has been protecting our customers for nearly four years and currently pays out to 98 percent of fraud victims, including those with losses under £100.” 

The regulator’s consultation on the future of fraud protection is aimed at changing the way the payments industry manages the widespread issue of fraud – today the most common crime in the UK.   

The regulator aims to drastically improve the industry refund rate, which currently sits at 56% of losses, under the industry code.

In comparison TSB refunds 98% of fraud cases under its Fraud Refund Guarantee.