According to ACI’s “2023 Prime Time for Real Time”, one in every five global consumers surveyed in 2022 said they lost money to fraudsters in the last four years. Around 26.9% stated they were victims of APP scams, which is now the number one fraud threat globally.
APP scams happen when scammers trick legitimate users into sending money to a destination account under their control. They can take many forms, but the most common are social engineering schemes, such as phishing or impersonation.
“APP scams are on the rise as fraudsters exploit human vulnerabilities and weaknesses in bank controls to manipulate mule accounts to receive funds from fraudulent activities and facilitate further illicit transactions”, said Cleber Martins, head of payments intelligence and risk solutions at ACI Worldwide.
“Banks need to safeguard their customers and revenue by shifting their focus from relying on traditional measures designed to prevent check or card fraud. They need to arm themselves with the right fraud strategies to capitalise on the security of the real-time payment rails and reap the benefits of real-time payments without fraud management becoming a cost-centre”, Martins continued.
APP scams and social-engineering fraud
Financial crime and fraud could drive up the global cost of fraud to $40.6bn by 2027. In February, GlobalData Lead Analyst Sam Murrant said 39% of fraud reported in 2022 was social-engineering based.
According to GlobalData’s “Trends in Payment Fraud” report, fraud losses reached 0.04% of global card payment value in 2022. In the UK, losses resulting from APP scams hit £811m in 2022 and are expected to grow at a CAGR of 20.5% between 2021 and 2026.
“We are not talking about hacking into computers. We are talking about attacks on consumers through social engineering, extortion, and confidence tricks”, Murrant commented during a GlobalData webinar.
Overall, ACI says more than £1.2bn was stolen through fraud last year in the UK.