Understanding the 13-month fraud rule and its impact on scam victims
Sarah, a victim of a sophisticated investment fraud, lost £20,000 and faced challenges due to the 13-month fraud rule when trying to recover her money. The 13-month fraud rule requires victims to report scams to their banks within 13 months of the last payment made to be eligible for reimbursement. Sarah discovered the scam 17 months after her initial payment, which complicated her claim.
Details of Sarah’s case and the 13-month deadline
Sarah believed she was making a legitimate investment in social housing and had conducted due diligence before investing £20,000 from her pension. However, she only realized it was a scam 17 months later. When she contacted Lloyds bank, they initially said they could only refund £1,000 because the larger payment was made after the 13-month deadline.
After BBC Radio 4’s Money Box investigated the case, Lloyds refunded Sarah the full amount. A spokesperson for Lloyds expressed sympathy for Sarah and emphasized the importance of reporting scams immediately to banks.
Calls for reform of the 13-month fraud rule
National Trading Standards has called for an urgent review of the 13-month rule, arguing it does not adequately protect all consumers. Louise Baxter, head of the Scams Team at National Trading Standards, stated that the time limit should start from when a victim realizes their money has been stolen, not from the date of the last payment.
Investment frauds can take a long time to uncover, and victims may not be aware they have been scammed within the current 13-month window. Reforming or removing the deadline could provide better protection for victims who discover frauds late.
Background on the 13-month fraud rule
- The 13-month rule is part of the Mandatory Reimbursement Requirement introduced by the Payment Systems Regulator in October 2024.
- It requires banks and payment service providers to reimburse victims of push payment scams within five working days, up to £85,000, if notified within 13 months of the last payment.
- The rule replaced a voluntary scheme and aims to standardize fraud responses across the finance industry.
- UK Finance states that only a small number of cases fall outside the deadline and victims can escalate complaints to the Financial Ombudsman Service (FOS).
- The FOS can order reimbursements up to £455,000 and has no time limit for claims.
The Payment Systems Regulator acknowledges that it can take time for victims to realize they have been scammed, especially in investment fraud cases, and expects firms to consider individual circumstances when applying the 13-month rule.
Conclusion
Sarah’s experience highlights challenges faced by victims under the 13-month fraud rule. While the rule aims to protect consumers and speed up reimbursements, calls for reform suggest it may not fully address the realities of complex scams. The case has prompted discussions about adjusting the deadline to better support victims who discover frauds after significant delays.