Growth in APP Scams Expected To Double by 2026 – Report by ACI Worldwide and GlobalData
15 November 2022 - 06:00PM
Business Wire
- APP fraud losses are expected to climb to $5.25 billion across
the U.S., U.K., and India by 2026, new report by ACI Worldwide and
GlobalData reveals
- Overall growth of real-time payments predicted to outstrip
growth of APP fraud losses, indicating that many banks, central
infrastructures, and regulators are taking necessary steps to
combat the threat
- Report calls for greater collaboration between financial
institutions, social media giants and telco companies to stop
fraudsters in their tracks
Authorized Push Payment (APP) fraud losses are on the rise and
expected to climb to $5.25 billion across the U.S., U.K. and India
by 2026 — a record CAGR of 21% — according to Scamscope, a new
report by global payments software company ACI Worldwide and
GlobalData, a leading global analytics firm.
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APP fraud scams involve fraudsters tricking their victims into
willingly making large bank transfers to them – in many cases, this
happens via social engineering across social media networks or via
telephone. The growth of real-time payments has given rise to this
new type of fraud, which in many markets is growing at a much
faster rate than card fraud.*
Scamscope also sheds a light on the types of APP fraud, with
product (37.8%), romance (18.4%) and investment scams (16.3%) being
the most common across all three geographic markets.
On the flipside, the overall growth of real-time payments is
predicted to outstrip the growth of APP fraud losses. In 2021, APP
fraud losses amounted to $2.7 billion, accounting for 0.047% of the
total value of real-time payments across the three markets in the
study ($5.8 trillion). In 2026, they are expected to amount to
$5.25 billion, accounting for 0.0025% of the total value of
real-time payment transactions in 2026 ($20.7 trillion). This means
that real-time revenue for financial institutions is expected to
grow faster than the risk of loss and that many banks, central
infrastructures, and regulatory bodies are taking the necessary
steps to combat the threat.
The report outlines four key
recommendations for financial institutions to tackle the
issue:
- Banks must get ahead of incoming regulatory changes and
strengthen and optimize both processes and technologies in the
fight against APP scams.
- Robust technology solutions are needed for the collection of
more and better customer data – behavioral data is key to tackling
social engineering.
- Better collaboration: banks at the initiating and receiving
ends of transactions must collaborate more closely to better
understand where money is being sent and why. That means creating a
network of intelligence based on the sharing of fraud signals in
metadata format, and in real time.
- Banks must get serious about disrupting mule account networks.
That means monitoring money coming into as well as out of
customers’ accounts and analyzing the behavior of those
accounts.
“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,” commented Cleber Martins, head of payments
intelligence and risk solutions, ACI Worldwide. “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.”
“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,” commented Sam Murrant, senior
payments analyst, GlobalData. “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.”
Scamscope Key Findings at a
Glance:
- APP fraud losses
- India: 2021 $330 million - 2026 $612 million
- U.K.: 2021 $789.4 million - 2026 $1,564.9 million
- U.S.: 2021 $1,629.4 million - 2026 $3,080.6 million
- Types of scams
- Product (37.8%), romance (18.4%) and investment scams (16.3%)
are the most common APP fraud scams across all three markets.
- Values of scams
- One in five (17%) fraudsters in the U.K. disguise their
activity by focusing on purchases between £251-£500 ($291-$579),
while U.S. fraud transaction values tend to fall in a wider range
of $251-$2,500, and one quarter (25%) of fraudulent transactions in
India are valued between INR 50,001 and INR 100,000
($607-$1,217).
- What do victims do after they have been scammed?
- ACI’s report further reveals that fraud victims in the U.K. and
India are more likely to choose to keep their account open
(28%-33%) in comparison to the U.S. (23%). Brand loyalty is also
shown to be maintained across all three countries –whether the
victim or their provider close the account, they remain with the
same provider.
Note to editors: *Authorized push
payment (APP) scams: The term describes a method of fraud in which
criminals coerce legitimate users to initiate a payment to a
destination account under their control. Funds leaving legitimate
customers’ accounts will travel through one or several mule
accounts before being collected by the fraudsters or converted by
them into hard-to-trace digital assets, such as crypto or NFTs.
Other terms for APP scams include “PIX fraud” in Brazil, “scams” in
Australia and “APP fraud” in the U.K. This report uses the terms
“APP scam” and “scams” interchangeably to refer to the same
problem.
About ACI Worldwide ACI Worldwide is a global leader in
mission-critical, real-time payments software. Our proven, secure
and scalable software solutions enable leading corporations,
fintechs, financial disruptors and merchants to process and manage
digital payments, power omni-commerce payments, present and process
bill payments, and manage fraud and risk. We combine our global
footprint with a local presence to drive the real-time digital
transformation of payments and commerce.
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Payments, Inc., ACI Pay, Speedpay and all ACI product/solution
names are trademarks or registered trademarks of ACI Worldwide,
Inc., or one of its subsidiaries, in the United States, other
countries or both. Other parties' trademarks referenced are the
property of their respective owners.
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Media Nick Karoglou nick.karoglou@aciworldwide.com
Katrin Boettger katrin.boettger@aciworldwide.com
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