The Central Bank has said it would support the introduction of a voluntary reimbursement arrangement among Irish banks for victims of authorised push payment (APP) fraud.
APP fraud is when consumers are tricked into manually authorising a payment from their account to a fraudster, with most such instances flowing from online advertisements.
Payment services in Ireland are governed by the European Union’s second payment services directive (PSD2). While it provides for refunds for victims of fraud via unauthorised transactions, there are no provisions obliging payment services providers to refund victims who authorised the transaction.
This gap in liability was identified in the European Banking Authority’s June 2022 Report. The European Commission recently proposed to extend liability of payment service providers to include APP fraud in limited cases – either when an Iban discrepancy was detected but not notified to the payer, or where the fraud involved impersonation of a bank employee.
The Central Bank’s director of consumer protection Colm Kincaid has said that with this proposal from the European Commission, “now is the right time” for the State to consider further domestic measures to protect victims of APP fraud.
Appearing before the Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach on Wednesday, Mr Kincaid said the Central Bank already expects banks to take steps to trace and recover money lost through APP fraud where possible, and compensate victims where the fraud resulted from a failure of the firm’s own systems.
However, Mr Kincaid said the regulator would also support the introduction of a voluntary reimbursement arrangement for APP fraud among industry actors, such as in the UK.
“The Central Bank would support any such initiative by industry, while recognising it must be properly calibrated,” he said.
He added that wider considerations of fraud prevention should involve not just banks and payment service providers, but commercial actors such as social media and communications companies through which APP fraud is carried out.
“80 per cent of APP fraud starts its life as an online ad ... We do think that the whole discussion around liability, especially when we’re talking about liability as an incentive to change behaviour, needs to involve all of the commercial actors who are involved,” he said.
Mr Kincaid also highlighted initiatives in other jurisdictions, such as the “Observatory for the Security of Payment Means” created under French law, which mandates information sharing and consultation between all relevant parties, including consumer representatives, ombudsmen, law enforcement and regulators.
He said the Central Bank would welcome the opportunity to participate in an equivalent Irish measure.
