Dive Brief:
- A fifth of consumers worldwide have been victims of payment fraud in the past four years, according to an ACI Worldwide report based on consumer polling last year.
- Of that group, more than a quarter (26.9%) have fallen victim to authorized push payment scams, which involve scammers tricking users into making payments to a destination account the scammer controls, ACI said in a news release issued Thursday. ACI called that type of payments fraud the top fraud threat globally.
- Financial crime and fraud are projected to cost banks and financial institutions around the world $40.62 billion by 2027, ACI said. With the rollout of FedNow in the U.S., real-time payment volume is expected to grow 32.6% by 2027, ACI said, referencing the March report.
Dive Insight:
Though push payment scams are defrauding consumers abroad, ACI argues that the U.S. doesn’t have to suffer the same fate. U.K. consumers lost £1.2 billion to fraud scams last year, more than a third of which were push payment scam losses, ACI said. In the U.S., the July launch of FedNow, the Federal Reserve’s real-time payments system, presents the chance for the financial sector to anticipate risk and update its management technology, ACI said.
Push payment 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,” Cleber Martins, ACI’s head of payments intelligence and risk solutions, said in a Thursday news release.
“Banks need to safeguard their customers and revenue by shifting their focus from relying on traditional measures designed to prevent check or card fraud,” Martins said in the statement. “They need to arm themselves with the right fraud strategies to capitalize on the security of the real-time payment rails and reap the benefits of real-time payments without fraud management becoming a cost-center.”
Fraud has become an increasingly large problem for payments players, and the onset of real-time payments has raised concerns about real-time fraud. Payments fraud came up at Nacha’s Smarter Faster Payments conference in April, during which Consolidated Edison Director Frank D’Amadeo urged banks to do more to combat fraud.
Payments firms are also tackling fraud with currently available payment products. Earlier this month, American Express CEO Steve Squeri said the card company has seen an uptick in scammers targeting elderly customers via gift card fraud.
