It’s never been easier to shop from your phone or your computer.  From digital credit cards so you don’t have to waste time looking for your wallet to autofilled card information when checking out online, your personal payment methods are always handy.  

While authorized push payment (APP) systems are convenient, they can be dangerous, too.  Sure, we’ve seen stories of kids spending thousands of dollars on toys they ordered from their parent’s online accounts, and know to enable childproof features or to never send money when you get a call from a long-lost African prince asking for a wire transfer, but fraudsters are tricky.  Unfortunately, becoming a victim of APP fraud is as easy as pushing a button.

What is APP Fraud?

Simply, APP fraud is when scammers not only trick you into sending them a payment but then authorizing the payment so it goes through.  This form of fraud doesn’t necessarily rely on hackers or stealing a victim’s identity.  Victims of APP fraud willingly hand over their money.

UK Finance estimates that in 2023, over £459.7million was stolen in APP scams.  It’s so common and profitable given the flexibility of the scam and its simplicity.  Since these scams involve real-time payment systems and the victims authorize the payments themselves, it can be difficult to remedy. 

Types of APP Fraud

APP fraud might seem basic, but there are different types of scams that might dupe one customer over another.  For instance, while UK Finance reports that 76% of APP fraud originates online, it accounts for less than 30% of APP losses, while phone scams, which represents only 16% of APP fraud, accounts for 43% of APP losses.  With that in mind, let’s take a look at some of the different APP scams you might encounter:

• Individual attacks: Attacks on individuals are one of the most common forms of APP fraud. Sometimes, scammers will send invoices to an individual from where they have an account, like a subscription service.  Other times, fraudsters will impersonate a romantic partner or a family member to entice a victim to send money.  Ultimately, these schemes prey on individuals’ willingness to help out a loved one or ensure they’re caught up on bills.
• Property fraud: Another type of APP fraud that can cost even more than individual attacks is “conveyancing fraud.”  This type of fraud involves criminals hijacking email threads between real estate buyers, sellers, solicitors, and agents and changing the payment details.  Eventually, the buyer’s funds for the property are diverted to the fraudsters.  
• Business scams: Businesses, like individuals, are often victims of APP fraud.  Scammers will fake supplier invoices and send them to businesses, who then authorize the payment, thinking they’ve paid their bills.  Businesses can also be victims of online purchasing scams when fraudsters impersonate their online store fronts; with brand imposters accounting for almost half the fraud reports received by the Federal Trade Commission (FTC) in 2023, customers can often leave impersonated poor reviews instead of the fake brand. 

How to Minimize the Risk of APP Fraud

It may seem easy to blame victims for authorizing payment to fraudsters, but the prevalence of the issue highlights the fact that these can be complex schemes that even the most attentive of people may fall victim to.  Here are a few  suggestions to help you minimize the risk of falling prey to APP fraud:

• Read between the lines: Sometimes, APP scams are easy to spot: text messages asking for payment from unknown numbers, misspelled emails alerting you to a late payment, automated voicemails notifying you of a due invoice.  When you have a suspect message, check who’s sending the message, the content of the message, and the next steps outlined in the message.  
• Protect sensitive information: While APP schemes usually avoid hacking into a victim’s information, it is important to protect personal details about yourself to prevent sensitive information from falling into the wrong hands.  Avoiding public wifi, limiting personal details online, and strong passwords are all instrumental in preventing fraudsters from learning information to tailor their scams to you. 
• Trust your gut: Are you feeling pressured to make a payment or feel like the communication is weird? It probably is.  If something seems off, contact the business or organization through a verified method and contact your bank. 

Identify Risks with Integrity

Integrity, a division of Aristotle, is a leader in identity verification and anti-fraud protection.  We have a variety of solutions to protect you and your consumers with customized validation services to meet your needs. Take a look at some of our offerings that can protect you from APP fraud: 

• Integrity IDV-Direct: A web-based platform to verify the identity of online visitors across our database of 3.4 billion citizens across 135 countries allows you to quickly and efficiently. The platform is available through a single API allowing for an “integrate once, use anywhere” approach and is combined with several external gateways to deliver a best-of-class verification solution that leverages global data.  
• Integrity IdentityRep: An partner developed system that integrates biometrics, social engagement, and anti-fraud identity networks into a single platform. Real time anti-fraud signals allow you to catch fraudulent users at onboarding by connecting a consumer’s real-life information, such as name, address, and date of birth, with their device and Internet interaction and behavior.
• Integrity Quiz: Integrate knowledge-based authentication, leveraging KYC-compliant personal information, into your verification system. Integrity Quiz utilizes voter data to create diverse questions and offers customizable time and velocity constraints. The system also screens against financial watch lists and politically exposed persons across multiple databases for compliance and integrity.

How can Integrity help you address APP fraud? Click the “FREE DEMO” button in the upper right corner and a representative will suggest the proper solution to meet your needs.