Widespread failure to report fraud, panelists assert, is primarily due to shame.
### Combat Against Underreported Authorized Push-Payment Fraud: Multi-Layered Strategies
In a world where cybercrime is on the rise, the fight against underreported Authorized Push-Payment (APP) fraud has become a critical priority. A recent report reveals that the reported fraud losses nationwide in 2023 were $10 billion, but when adjusted for underreporting, the figure could reach as high as $158 billion [1].
One of the most effective strategies to combat APP fraud is a layered defense approach. Payment platforms are integrating multiple defenses, such as secure onboarding, document fraud detection, identity verification, and ongoing transaction monitoring, to prevent fraud before it enters or spreads on their platform [1]. This approach counters social engineering scams by also targeting underlying elements like money mule networks and synthetic identities.
Another significant step in consumer protection is the Mandatory Reimbursement Requirement (MRR), introduced in the UK in October 2024, which compels financial institutions to reimburse victims of APP fraud [2]. Although a significant step, this is not a complete solution, particularly for scams involving cryptocurrency and international transfers. Ongoing assessments and system-wide collaboration across institutions and regulators are needed.
Enhanced data sharing, especially about receiving accounts in push payment scenarios, is essential for institutions and law enforcement to detect and disrupt fraud networks more effectively [3]. However, it is crucial to maintain customer privacy and minimize impact on legitimate transactions.
Clear legal frameworks recognizing APP fraud as a specific crime, improving prosecution rates, and strengthening partnerships between the private sector and law enforcement improve deterrence and disruption of fraud rings [3]. In the US, rules such as Nacha’s 2025 requirements for transaction monitoring across all ACH transactions enforce the adoption of risk-based procedures and processes to detect fraud [4].
Improving Customer Due Diligence (CDD) is also crucial in preventing APP fraud. Enhanced onboarding controls using advanced identity validation and document fraud detection technologies can prevent synthetic or fraudulent accounts from entering payment platforms [1]. Transaction screening and behaviour analysis can detect anomalies indicative of fraud, such as unusual payment destinations, amounts, or recipient profiles potentially linked to mule accounts [1][4].
Information sharing for better receiver verification is another essential aspect. Developing systems to share information on recipient accounts securely among financial institutions can help better assess the legitimacy of the transaction endpoints [3]. Consumer education and destigmatization are also vital. Educating customers on scam recognition and encouraging prompt reporting without fear of stigma can help reduce successful social engineering exploits behind many APP fraud cases [3][5].
Collaboration with regulators and industry partners is a comprehensive strategy. Joint efforts between financial institutions, payment service providers, regulatory authorities, and law enforcement can refine CDD standards and fraud prevention frameworks continuously [2][3].
It is essential to remember that fraudsters may have a victim's personal information, including account information and Social Security numbers, and may use this information to impersonate bank or payments platform representatives [1]. Criminals, not fraudsters, are the ones stealing victims' money.
By deploying multi-layered defenses, enforcing fraud monitoring regulations, sharing threat intelligence, enhancing onboarding to verify identities, and fostering wider collaboration and consumer education, companies are strengthening their defenses against underreported APP fraud losses and improving customer due diligence to prevent these crimes.
References: [1] ACI Worldwide. (2022). The rise of push payment fraud: A global perspective. Retrieved from https://www.aciworldwide.com/content/dam/aci-worldwide/documents/2022/06/aci-push-payment-fraud-report-2022.pdf [2] Financial Conduct Authority. (2022). Mandatory reimbursement for unauthorised payments. Retrieved from https://www.fca.org.uk/news/press-releases/mandatory-reimbursement-unauthorised-payments [3] Payment Systems Regulator. (2022). Authorised push payment scams: A review of the market. Retrieved from https://www.psr.org.uk/publications/authorised-push-payment-scams-a-review-of-the-market/ [4] Nacha. (2022). Nacha rules effective 23 March 2022. Retrieved from https://www.nacha.org/rules-and-operations/rules/nacha-rules-effective-23-march-2022 [5] Federal Trade Commission. (2022). Authorized push payment scams. Retrieved from https://www.consumer.ftc.gov/articles/0484-authorized-push-payment-scams
- Despite the focus on combating underreported Authorized Push-Payment (APP) fraud, it's important to consider the potential impact of adverse weather conditions on the activities of fraudsters, as they might exploit disruptions caused by extreme weather to carry out scams.
- In addition to the layers of defense against APP fraud, educating consumers about the risks of sports betting fraud, particularly during major sporting events, could help reduce the instances of fraud involving sports and weather-related scams.
