A new report by ACI Worldwide and market intelligence firm GlobalData has revealed an increase in Authorised Push Payment (APP) fraud in the US, the UK and India.
Titled ‘Scamscope’, the study predicts that losses from APP attacks will climb to a staggering $5.25bn across the three markets in just four years from now.
With technological advancements paving the way forward for the payments industry, fraudsters also evolve to introduce new strategies. APP scams are one of the latest iterations of this rhetoric, luring unsuspecting accessories to crime to deposit thousands in a stranger’s bank account after being manipulated on social networks.
Cleber Martins, Head of Payments Intelligence and Risk Solutions at ACI Worldwide, commented: “APP fraud is on the rise, and despite many banks stepping up their fraud prevention efforts, this is an issue they can no longer solve on their own.
“APP fraud does not happen in silos. To contain and stop this kind of fraud, a detailed and holistic view of all payments activity is needed. Financial institutions, social media giants and telco companies need to work together to stop fraudsters in their tracks before the fraudulent transactions take place.”
According to Scamscope, the most common APP fraud themes in all three markets are conversations around a product purchase (37.8%), romance (18.4%), and investment scams (16.3%), with some positives also highlighted despite the report’s initial negative connotation.
Real-time payments, Scamscope protrudes, are predicted to outgrow APP fraud losses. The paper gives 2021 as an example where although APP fraud was estimated at $2.7bn in all three studied markets, it still signified a total of 0.047% from the value of real-time payments ($5.8 trillion).
For 2026, real-time payments are expected to be worth $20.7 trillion, which remains miles ahead of APP fraud estimated to then be worth around $5.25bn.
Both Worldwide and GlobalData appreciate that banks, central infrastructures and regulatory bodies are “taking the necessary steps to combat the threat”, but they also issue a few recommendations regardless.
Some of the “four key” ones that the report outlines include a technological revamp and increased collaboration for banks that want to stay ahead of regulations.
Sam Murrant, Senior Payments Analyst for GlobalData, added: “Although there are indications that banks are taking the necessary steps to combat the new fraud threat, they must not be complacent regarding these risks.
“Aside from the direct cost of fraud losses, the lack of regulatory protections around reimbursing consumers for APP fraud losses means there is a potential loss of trust, and thus customers, from APP fraud.”