The public is being tricked into sending more and more money to fraudsters. At NetGuardians, we saw a 500 percent rise in authorized push payment (APP) fraud in Switzerland in the first half of this year compared with the first half of 2021, with US$25,000 being the average value and US$500,000 being the largest attempted amount. In the UK, APP fraud has overtaken card payment fraud to net the most cash for fraudsters. Fraud fighter Sandy Lavorel explains what APP fraud is, why it’s growing so fast and what can be done.
What is it?
APP fraud is when the customer is duped – or scammed – into making a payment.
How does it happen?
It usually starts with social engineering – phishing – for personal information that is used to trick the customer into sending funds to an account controlled by the fraudster. Typical scams include love, investment, fake deliveries and IT support.
The criminals also spam mobile phones, sending text messages to lure the victim into a conversation and ultimately into making a payment.
Why is it a problem now?
The pandemic pushed more people into the digital world. This has made it easier for criminals to pretend to be someone and insert themselves into victims’ digital lives.
Why is it growing so fast?
Success breeds success – criminals know it works. It also doesn’t demand special skills as criminal gangs are buying and selling cybercrime-as-a-service (CaaS) and phishing-as-a-service (PaaS) to facilitate it.
What happens to the money?
Payments are first sent to a mule account and quickly transferred to another account to be cashed out. Increasingly, the money remains in the country where the scam occurred.
Who is affected?
Anyone can be a victim, but some groups are more susceptible to particular scams than others. In Switzerland, data shows that men over 60 are most likely to fall victim to an investment scam or a support scam. Men between 18 and 34 are the most common victims of fake delivery scams, while women over 60 are most likely to fall victim to love scams.
How can we stop it?
As the customer is authorizing the payment, it is difficult to spot APP scams. Static rules alone are neither effective nor efficient. Intelligent AI-based systems particularly built for banks and looking for anomalies are essential. In addition, sharing information about destination accounts known to be used by the fraudsters is proving successful.
What’s the solution?
NetGuardians has a global community of banks using our AI-based fraud-prevention software. We share information within the community, helping to eliminate 99 percent of all payment risk, including APP fraud.
If you want to beat the APP fraudsters and protect your customers, talk to NetGuardians today.
Sandy Lavorel is a fraud fighter at NetGuardians
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