APP Scams Emerge as the Top Payments Fraud Threat With Fraudsters Changing Tactics, Finds ACI Worldwide Report

One in every five global consumers surveyed in 2022 said they fell victim to payments fraud in the last four years — 26.9% of whom are victims of Authorized Push Payment (APP) scams, which is the number one fraud threat globally — according to the 2023 Prime Time for Real-Time report published by ACI Worldwide (NASDAQ: ACIW), a global leader in mission-critical, real-time payments software, in partnership with GlobalData, a leading data and analytics company.

APP scams happen when scammers coerce legitimate users to initiate a payment to a destination account under their control. APP scams can take many forms, the most common being social engineering — such as phishing or impersonation scams. Push payments offer rapid settlement and reconciliation for faster payment services and real-time payment systems. While the window of opportunity to catch fraud is shorter, advanced AI capabilities coupled with the rich data that ISO 20022 enables and the signals that the digital channels and devices provide allow for unprecedented precision and speed in detecting and addressing fraudulent activities.

"APP scams are on the rise as fraudsters exploit human vulnerabilities and weaknesses in bank controls to manipulate mule accounts to receive funds from fraudulent activities and facilitate further illicit transactions. Banks need to safeguard their customers and revenue by shifting their focus from relying on traditional measures designed to prevent check or card fraud. They need to arm themselves with the right fraud strategies to capitalize on the security of the real-time payment rails and reap the benefits of real-time payments without fraud management becoming a cost-center," said Cleber Martins, head of payments intelligence and risk solutions, ACI Worldwide.

Unity is strength in combatting scams

More than £1.2 billion in the U.K. were stolen through fraud in 2022, with over one-third contributed by APP scam losses. In June 2023, the U.K. Payment Systems Regulators announced new reimbursement requirements for APP scams within the Faster Payments system. It requires payment firms to reimburse all in-scope customers who fall victim to APP fraud with a cost-sharing of 50:50 between sending and receiving payment firms. The banking industry needs a united front against APP scams, and with the regulators stepping in, it provides a stronger impetus for financial institutions to collaborate and shut fraudsters down.