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Why UK FinTechs are investing heavily in APP fraud prevention

By Puja Sharma

November 25, 2022

  • Allpay
  • Anti fraud
  • APP Fraud
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fraud, FinTech

A study conducted by Goldman Sachs found that people aged 34 or under are around twice as likely to have fallen victim to a scam as older adults.  Throughout 2021, criminals have focused their activity on authorised push payment (APP) fraud, which involves tricking a customer into willingly authorising a payment into an account that is controlled by the criminal.

Fraud has become the most commonly experienced crime in England and Wales, and FinTech companies are working hard to develop solutions that help to reduce the number of victims. UK-based payments specialists, allpay Limited, offer a Confirmation of Payee solution which provides peace of mind for businesses and their customers that their payments are going to the correct bank or building society account.

According to the UK Parliament ‘Fraud and the Justice System’ 2022 report, fraud now accounts for more than 40% of all recorded crimes in England and Wales. Criminals are continually adapting how they trick victims into providing their account details or personal information in an attempt to defraud them of their funds.

A study conducted by Goldman Sachs found that people aged 34 or under are around twice as likely to have fallen victim to a scam as older adults. Just over 20% of 18 to 34-year-olds said they had been the victim of financial fraud at least once, compared with 12% of people aged 35 to 54 and around one in 10 over-55s. Throughout 2021, criminals have focused their activity on authorised push payment (APP) fraud, which involves tricking a customer into willingly authorising a payment into an account that is controlled by the criminal.

APP fraud is one of the fastest-growing types of scams around and accounted for 44% of the total financial fraud losses in 2021. APP fraud involves fraudsters tricking victims into voluntarily sending large amounts of money to them. In their Annual Fraud report, UK Finance members sighted a total of 195,996 incidents of APP scams in 2021, totaling losses of £583.2 million, compared with £420.7 million in 2020.

Criminals utilise common tactics such as scam emails, text messages, and phone calls, as well as fake websites and social media posts. The victim’s information is then used by the criminal to convince them to authorise payments. Criminals have started targeting people directly in their homes across online platforms. With more people working from home and using the internet daily for things such as online-shopping, it’s no surprise that the majority of APP fraud starts online.

Unsurprisingly, customers are demanding more protection and looking for a smooth payment journey, which is where Confirmation of Payee (CoP) comes in. The coP is a new industry-wide response and one of the many ways the finance industry is tackling APP fraud in the UK.

Criminals are experts at impersonating people, businesses, and the police. They spend hours researching your business for their scams, hoping you will let your guard down for just a moment. With allpay’s Confirmation of Payee, you can take action to reduce fraud, protect your reputation and compete effectively for loyal customers.

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