A recent study by Copenhagen Economics has identified significant issues with the European Parliament's proposed amendments to the Payment Services Regulation (PSR). The amendments suggest a shared liability regime for authorized push payment (APP) fraud, which the study argues could undermine effective fraud prevention and consumer protection.
The original proposal from the European Commission aimed to hold payment service providers (PSPs) accountable when users are deceived into authorizing payments to fraudsters. However, the European Parliament's amendment extends this liability to include online platforms and electronic communication service providers like telecom operators, requiring them to refund victims of impersonation fraud.
Copenhagen Economics notes that no impact assessment has been conducted on this novel regime, which would be unprecedented globally. The study, commissioned by CCIA Europe, indicates that there is no evidence supporting the MEPs' shared liability proposal. It highlights that platforms, telecom providers, and PSPs already invest significantly in fraud prevention efforts.
The study warns of unintended negative consequences if a shared liability regime is implemented. These include increased societal costs, higher barriers for smaller digital entities, slower payment processes, and restricted access to online services for vulnerable groups more prone to fraud.
Additionally, it suggests that shared fraud liability would be impractical since no single entity has enough insight into the complex chain of fraud. It could lead to a culture of "blame shifting," where PSPs might be "incentivised to shift reimbursement liability to a counterparty rather than collaborating with them to reduce fraud."
CCIA Europe is urging EU Member States, who are currently finalizing their stance on the PSR, to dismiss this proposal. They advocate for rules that support evidence-based solutions enhancing collaboration and ensuring legal clarity while undergoing thorough impact assessments before introducing new liability frameworks.
Boniface de Champris from CCIA Europe states: “Europe’s approach to payment fraud must be practical and evidence-driven. By contrast, the European Parliament’s ambiguous proposal jeopardises consumer trust and innovation without delivering any proven benefits. This new study clearly demonstrates the harms of Parliament’s approach.”
He further adds: “The chain of players fighting payment fraud is extremely intricate and constantly evolving. That’s why CCIA Europe calls on EU Member States to champion smarter, collaborative solutions in the ongoing legislative discussions about the Payment Services Regulation.”
