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Banks to introduce name checks on online payments in effort to combat authorised push payment (APP) fraud

Stuart Datlen

The BBC reported last week that nearly £150m was stolen between January and July this year after bank customers were duped into transferring money into fraudsters’ bank accounts. Fraudsters would pose as a business or individual familiar to the victim and request money to be paid into their bank account. This is known as Authorised Push Payment (APP) fraud. 

At present, when an individual or business transfers money to another bank account, banks only check that two criteria match: 

•    The sort number
•    The account number

Banks will often ask the account holder transferring the money to enter the recipient’s name as well, however, at present, this is only used as a reference for the sender. From July 2019, banks will be checking that the name entered matches that of the account number and sort code as an extra level of security for customers.

Mistakes can often be made when adding a new payee or amending an old one and one incorrect digit could see money end up far from where it was intended to go. Once the new system is in place, banks will check that the name, sort code and account number all match, in effort to combat APP fraud and avoidable mistakes.

At present, the law does not protect customers from APP fraud as the account holder has to authorise the transaction, despite being duped. This is unlike unauthorised transactions when fraudsters get hold of someone’s card details and/or PIN.

Under the new system, if a similar name to the account holder or organisation’s is used, the actual name of the account holder will be provided to be checked. Once the details entered all match, the payment will be processed.

However, if the name entered does not match the name of the account holder, the sender will be advised to make contact with the individual or organisation they are trying to pay. Payment can still be sent if the details do not match, however, the account holder will be fully liable for the mistake.

Many customers have been left wondering why banks have taken so long to implement this new level of security. But as scams have become more sophisticated, technological advancements are being used to get and remain one step ahead of fraudsters.