Finance

What is Authorized Push Payment Fraud and How can Companies protect Themselves from It?

An authorized push payment fraud happens when a person manages to deceive an individual or a business into authorizing the transfer of funds to a fraudulent bank account. To do so, these criminals pretend to be legitimate by impersonating a trusted supplier or using phishing emails to request payment. Here is what you need to know about APP and how your company can protect itself from it.

Solutions for Companies against Authorized Push Payment Fraud

When a company is losing money because it suffered from APP fraud, it is almost impossible to recover the loss. That is why it needs to protect itself as bast as it can against it. Today, there is a solution that incorporates machine learning algorithms and is supported by a database with over 10 years of fraud cases to detect irregular banking activity. The company that launched it works with businesses and provides them with the ability to configure and customize their own rule-based fraud detection system. The final goal is to enhance their fraud prevention capabilities. You can find out more about it on this website.

To prevent the frauds from happening, there are a few measures that can be taken by businesses in order to protect themselves. They are necessary, even if they use the solution that we mentioned above. They are:

To educate employees on how to identify and prevent APP fraud
To establish clear payment policies and procedures, including verifying payment requests and authorizations
To implement fraud detection and prevention tools, which should include alerts for unusual account activity and multi-factor authentication for transactions
To monitor bank accounts and financial transactions for unauthorized activity periodically
To always use secure communication channels for the transfer of sensitive financial information, such as encrypted emails or password-protected portals

Is Authorized Push Payment Fraud a Serious Issue Today?

Authorized push payment (APP) fraud is a growing issue in the EU and the UK. Businesses are being targeted, but also their customers. That is why many efforts are being made to prevent these scams. It includes regulatory updates related to bank liability and new rules that allow the victims of APP fraud to complain to financial authorities. However, despite these efforts, APP fraud remains a significant challenge facing the financial industry today, and those who get caught in APP fraud never get back the money that they have lost.

The latest studies show that the losses caused by authorized pushed payment fraud is expected to climb to over $1.5 billion in the UK in the next four years. That is quite an increase from the £479 million that were actually loss in 2020, in this country. It has been mentioned that 75% of fraudulent online banking transactions in the first half of 2022 involved APP fraud, which fully indicates the importance of continuing to look for solutions to break down APP.

In conclusion, we can safely say that APP fraud is a significant and ongoing problem for business, in 2023. Although financial institutions and regulators are working to prevent and solve the issue, it is best for companies to protect themselves from it immediately.