Guide to Authorized Push Payment (APP) Fraud (2024 Edition)

Guide to Authorized Push Payment (APP) Fraud (2024 Edition)

In the digital age, Authorized Push Payment (APP) fraud has become a significant concern for both individuals and businesses alike. In 2023, APP fraud losses in the UK amounted to over £459.7 million, with a 12% increase in cases, totaling 232,429 fraud attempts.

APP fraud occurs when fraudsters convince their victims to initiate APP transactions under false pretenses. These transactions, which include wire transfers, bank transfers, and digital wallet payments, give the payer control over how much is sent to the payee and when.

The most common APP fraud scheme in 2023 was purchasing, amounting to 77,000 cases. Fraudsters often make the payer believe they are paying for actual goods or services, only to disappear with the funds. Other common schemes include invoices for services or goods that were never provided, loan fees for a loan never received, and investment in a fake business promising guaranteed returns.

Romance is also a common APP fraud scheme, where fraudsters establish fake romantic relationships to manipulate victims into transferring money. Impersonation is another tactic, where fraudsters pose as existing entities, such as companies or government services, to trick victims into thinking they're sending money to a legitimate source.

To mitigate APP fraud, businesses should implement advanced security measures, educate customers about the risks, and take a holistic approach. This includes transaction and behavioral monitoring, fraud detection and prevention systems, and reporting suspicious activities.

One of the key mitigation strategies is behavior-based fraud detection. Solutions like BioCatch Scams360 use behavioral biometrics and pattern analysis to identify and block APP fraud in real time by detecting the psychological manipulation involved in these scams, preventing the transfer of funds before loss occurs.

Multi-factor authentication (MFA) and strong customer authentication (SCA) are also essential. Implementing layered verification methods, such as biometrics and one-time passwords, significantly reduces the risk by ensuring that the customer authorizing the payment is legitimate.

Customer education and fraud prevention checklists are equally important. Businesses equip customers with guidance such as keeping contact details updated, using strong and unique passwords, and enabling transaction alerts. These measures help customers detect and respond quickly to unauthorized transactions.

Proactive fraud prevention and device monitoring are also crucial. Platforms employing AI-driven behavioral malware detection and device monitoring can identify Remote Access Trojans and other malware that fraudsters use to control user devices and make illicit payments, thereby stopping fraud at the device interaction level.

Financial institutions can also request and verify proof of authorization to reduce first-party fraud and improve the accuracy of claims investigations as part of the broader fraud management framework.

In conclusion, APP fraud involves social engineering and device compromise, requiring both advanced technical defenses and user-focused strategies. By combining technological innovation with behavioral analysis and customer engagement, businesses can create a robust defense against APP fraud.

It's essential for businesses to act against APP fraud not only to protect their financial interests but also to avoid substantial reputational damage. Sumsub prepared a suggested read on Account Takeover Fraud: Prevention and Protection for further insight into this matter.

1. In the battle against APP fraud, implementing multi-factor authentication (MFA) and strong customer authentication (SCA) is crucial, as they offer layered verification methods which help ensure that the customer authorizing the payment is legitimate and significantly reduce the risk of unauthorized transactions.
2. Financial institutions can adopt a proactive approach by requesting and verifying proof of authorization, thereby reducing first-party fraud and improving the accuracy of claims investigations, ultimately strengthening their overall fraud management framework.

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