Why Should Banks Pay Scam Victims?

Hi, this is Jiro.

To be honest, I lost 120,000 yen to a PC repair scam.

The amount was not huge, fortunately. But that didn’t stop me from blaming myself.

“How could I have fallen for such a scam?”

That thought stayed with me for quite a while.

Then one day, an English friend told me something surprising.

“In England, banks have started compensating victims of fraud.”

Really? Banks pay the victims back?

I first searched the Internet in Japanese, but found very little. So I tried searching in English. And there it was: first-hand information from the UK’s Payment Systems Regulator (PSR).

What has happened since the new system started surprised me even more.

According to the PSR:

In the 18 months since 7 October 2024, 88% (£316m) of the money lost to APP scams has been reimbursed to victims.

The compensation limit is £85,000 per case.

APP stands for “Authorised Push Payment.” In simple terms, APP fraud happens when someone is tricked into sending money to a fraudster through the banking system.

In other words, the victim sends the money willingly.

That may sound like exactly the kind of case in which we tend to say in Japan:

“You sent the money yourself. You should have been more careful.”

So I became even more curious.

Why should banks have to pay when they are obviously not working together with the fraudsters?

Here is part of the PSR’s answer:

Through our measures, these firms will be incentivised to stop fraud from happening in the first place – including… those firms on the receiving end that bank the fraudsters.

This was the part that interested me most.

Once banks have to bear some of the loss, they have a strong reason to prevent fraud before it happens.

They may, for example, check more carefully when new accounts are opened, watch suspicious flows of money more closely, and pay more attention to accounts receiving money from fraud victims.

Of course, the system does not guarantee 100% compensation. And users are still strongly advised to be careful when sending money.

But the idea seems to be this:

Don’t just tell victims to be more careful. Give banks a reason to fight fraud, too.

So the system is not only about helping victims after they lose money. It also tries to reduce the number of APP scams in the first place, with the help of the banks.

Japan has also seen a large number of similar scams in recent years.

Here, however, much of the emphasis seems to be on what users should do: Be careful. Restrict large transfers. And when someone does fall for a scam, we are often too quick to ask why the victim wasn’t more careful.

Of course, we users need to be careful.

But I would also like to see Japanese banks play a bigger role in the fight against fraud.

There was one more thing that bothered me.

Why had it been so difficult to find information about this British system in Japanese?

After all, this is a large-scale social experiment involving banks, fraud victims, and millions of pounds. Surely here is an idea worth knowing about.

If you are interested, try searching for it yourself.

And try searching in English.

English can give you access not only to more information, but sometimes to a completely different way of looking at a problem.

In this case, English gave me access to information I probably would not have found otherwise.

Learning English can give us another pair of eyes with which to look at the world around us.

Happy English learning!

P.S. There was also an unexpected personal benefit to all this research.

Fortunately I stopped blaming myself so much.