Dive Brief:

• The value of APP fraud transactions, which involves legitimate account holders being misled into authorizing fraudulent transactions, will rise in the U.S. to $3.08 billion by 2028, up from $2.16 billion last year, according to a report ACI from Worldwide issued last week.

• As real-time payments rise in the U.S., authorized push payment fraud via those instant payment rails is expected to increase to $2.06 billion by 2028, from $865 million last year, according to the report.

• The median value of fraud losses in the U.S. has fluctuated in recent years, jumping 67% in 2022 to $500 and then peaking the following year at $650 before dropping last year to $500, according to ACI’s analysis of Federal Trade Commission consumer data.

Dive Insight:

Worldwide, the value of push payment scams is expected to surge to $7.6 billion by 2028, up from $4.38 billion last year, the ACI report said. The real-time payments portion of that increase will more than double to $6.1 billion, up from $2.78 billion. 

While artificial intelligence has enabled cybercriminals to execute fraud at scale, ACI advised financial institutions to use AI to analyze transactional data, spot suspicious behaviors and work together in real-time with other banks. Financial firms could also use AI to comb through current transactions and make risk assessments based on up-to-date data, the report noted. 

“Integrating AI in financial services is a double-edged sword, both in enabling sophisticated financial crimes and fortifying defenses against them,” Cleber Martins, head of payments intelligence and risk solutions at ACI Worldwide, said in a press release accompanying the report. “Scammers are using AI to boost inherited trust to unprecedented levels, automating hits and driving more effective social engineering techniques.”

As financial institutions’ investment in multi-factor authentication has curtailed many forms of fraud, such safeguards are insufficient to combat APP fraud, because it involves authorizing inappropriate transactions, ACI noted in the report. To curb APP fraud, government agencies have begun holding banks accountable for fraud losses and pushing more financial firms to integrate comprehensive monitoring tools to surveil incoming and outgoing transactions, the report said.

Payments companies are investing billions of dollars in efforts to combat fraud. For instance, credit card networks Visa and Mastercard both made acquisitions in September that are aimed at bolstering their fraud-fighting and cybersecurity features.

Nonetheless, instant payments passed by banks directly will require that industry to step up too. “The rise of real-time payment APP scams requires a coordinated cross-industry defense to share precise and collective intelligence in real-time,” Martins said in a release.