ACI Worldwide Scamscope Report Finds APP Scam Losses Expected To Hit $6.8 Billion by 2027
05 Diciembre 2023 - 1:00AM
Business Wire
- Losses to APP scams are expected to record an average CAGR of
11% from 2022-2027 across analyzed markets.
- APP scam losses are expected to grow at almost 50% of the CAGR
of real-time transaction value.
- Report outlines scam defense strategies, which include creating
an intelligence-sharing network, embracing responsible AI and
boosting consumer education.
Authorized Push Payment (APP) scam losses are on the rise and
expected to climb to $6.8 billion — a combined compound annual
growth rate (CAGR) of 11% — by 2027 across six leading real-time
payment markets (U.S., U.K., India, Brazil, Australia and Saudi
Arabia) according to Scamscope, a new report by global payments
software company ACI Worldwide and GlobalData, a leading global
analytics firm. During the same period, the overall value of
real-time transactions is also forecasted to grow at a faster pace,
reaching 25% CAGR.
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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. “As real-time payments surge forward, the slower yet
disconcerting rise of APP scams puts regulators under pressure to
define accountability and assign liability,” commented Cleber
Martins, head of payments intelligence and risk solutions at ACI
Worldwide. “A cross-industry payments intelligence model for
sharing anonymized fraud intelligence signals can strengthen the
insights for automated AI systems and facilitate collaboration in
real time to profile transaction risk without compromising IP, data
privacy or compliance obligations.”
Fraud prevention key to unlocking
sustainable growth in real-time payments
Among the markets covered in the report, Saudi Arabia and Brazil
are the top two markets with the highest CAGR in scam loss value
and among the top three with the highest CAGR in real-time payments
value. This implies a concerning correlation between the increase
in scams and the expanding volume of real-time payments and
underscores the importance of addressing scams within the rapidly
growing landscape.
In Brazil, scammers are exploiting PIX’s success, benefiting
from a lag in the development of processes and tools to detect
fraudulent transactions. This hinders the identification of mule
accounts used to transfer stolen funds. In Saudi Arabia, a nascent
real-time payments market, scams seen in more established real-time
payment markets are now emerging here as well. With centralized
regulatory control, there is an opportunity to encourage banks to
improve both data quality and collaboration to combat mule
networks.
Real-time payments leap ahead of APP
scams, yet caution prevails
APP scam losses in the U.S. are projected to increase by 9% from
2022 to 2027. However, real-time payments adoption fueled by the
FedNow Service is projected to surpass this growth, with a
remarkable 41% CAGR. With the expanding scope of real-time
payments, banks should seize the opportunity to adopt a proactive
stance toward preventing fraud.
India mirrors the U.S. trend, with APP scam loss value
significantly lower than the real-time transaction value. Indian
banks are turning the tables on scams with proactive fraud
management. For example, the Indian Banks Association suggested
fixing a threshold limit of transactions for newly opened accounts.
These efforts would be bolstered by a network intelligence
framework to share vital data signals and by leveraging AI and
machine learning to spot transaction abnormalities.
Regulatory mandates put banks on the
hook for scam victim reimbursement
According to the Scamscope report, APP scam losses in the U.K.
hit more than $587 million in 2022. Mounting consumer losses are
driving market trends toward regulatory mandates, compelling
financial institutions to compensate scam victims. In June 2023,
the U.K.’s Financial Services and Markets Bill came into effect,
requiring banks to reimburse the victims of APP scams.
With APP scam losses expected to reach $1.5 billion by 2027,
Australians have implored their government to follow the U.K.’s
lead. Banks have pushed back, contending that telecom and social
media firms should also bear responsibilities. The Australian
Competition and Consumer Commission calls for a united front across
public and private sectors to combat scams. Recently, the
Australian banks came together to form a new Scam-Safe Accord - a
confirmation of payee system that will help reduce scams by
ensuring people can confirm they are transferring money to the
person they intend to.
The report outlines four key
recommendations for financial institutions to tackle the
issue
- According to the Scamscope report, approximately 3 out of 10
fraud victims close their accounts, posing financial consequences
for banks. There is also increasing pressure on regulators to hold
banks accountable for fraud. Banks must get ahead of regulatory
mandates to fortify control and build trust.
- APP scams are a cross-industry problem that requires solutions,
techniques and intelligence shared among financial institutions,
the government, telcos and social media tech companies. Seamless
collaboration is needed to combat social engineering, liability
disputes and mule account scams.
- By closely monitoring both incoming and outgoing transactions
and analyzing account behavior, banks can break the mule account
chain and detect mule accounts associated with synthetic or stolen
identities and instances of account takeover.
- In the AI-driven era, a proactive approach is paramount to
combat scammers. Leveraging diverse data signals and advanced
technologies like voice biometrics enables institutions to
understand customer intent, prevent emerging AI threats and
safeguard customer relations.
Scamscope key findings at a
glance:
- APP fraud losses by country 2022-2027
- Australia: $793-$1,522.9 million
- Brazil: $246.7-$635.6 million
- India: $393.7-$611.9 million
- Saudi Arabia: $25.3-$81.5 million
- U.K.: $587.2-$934.7 million
- U.S.: $1,939.9-$3,030.8 million
- CAGR of APP scams value vs. CAGR of real-time transactions
value (2022-2027)
- Australia: 14% vs. 24%
- Brazil: 21% vs. 26%
- India: 9% vs. 22%
- Saudi Arabia: 26% vs. 34%
- U.K.: 10% vs. 22%
- U.S.: 9% vs. 41%
- Top 3 APP fraud scams by country
- Australia: Outstanding Balance (33%), Product (22%) and
Investment (22%)
- Brazil: Advance Payment (27%), Product (20%) and Investment
(17%)
- India: Product (42%), Investment (21%) and Advance Payment
(16%)
- Saudi Arabia: Product (33%), Investment (16%) and Advance
Payment (14%)
- U.S.: Product (23%), Investment (23%) and Advance Payment
(17%)
- U.K.: Advance Payment (25%), Product (24%) and Investment
(19.5%)
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 and financial
disruptors 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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Nick Karoglou | Head of Communications and Corporate Affairs |
nick.karoglou@aciworldwide.com
Lyn Kwek | Communications and Corporate Affairs Director,
APAC/South Asia | lyn.kwek@aciworldwide.com
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