ACI Worldwide Releases a Three-Step Guideline to Combat Fraud

June 21, 2023

ACI Worldwide and GlobalData joined for a study that wishes to clarify the “growing challenge” of Authorized Push Payments (APP) scams.

According to ACI Worldwide‘s Prime Time for Real-Time 2023 report, from 2020 to 2023, one in five consumers around the globe were victims of fraud, and APP was marked as the top fraud threat.

APP scams occur when scammers get consumers to make payments to accounts controlled by fraudsters.

With the rise of real-time payment systems, fraud detection requires advanced AI capabilities as well as rich data analysis enabled by ISO 20022.

The “rapid settlement and reconciliation” that push payments deliver makes it so systems have less time to recognize and catch fraud. But new technologies make it so detection and response is both fast and precise.

According to head of payments intelligence and risk solutions at ACI Worldwide, Cleber Martins, banks need to shift their attention from traditional fraud (such as checks and cards) to APP.

APP 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.

He added that banks need to “arm themselves” with the correct strategies to fight fraud and capitalize on “the security of the real-time payment rails and reap the benefits of real-time payments.”

Fraud Around The World

In the UK alone, £1.2 billion were stolen through fraud in 2022, of this huge sum, one-third was attributed to APP scams. As a solution, the UK payment regulators made new guidelines as to reimbursement requirements for APP scams.

This means that should a legitimate customer fall victim to APP scams, the sending and receiving firms will have to split the cost of reimbursement.

The regulatory intervention provides a united front against APP scams and encourages collaboration among financial institutions to combat fraud

As for Australia, AU$3billion were lost to scammers in 2022, as a result, they have also put emphasis on the fight against fraud. Enter the Fraud Reporting Exchange platform, introduced by the Australian Banking Association, hoping to reduce fraud by letting banks stop multiple scam transactions related to the same fraud, and share the intel to prevent losses in the future.

The government’s strategic plan for the payments system includes establishing the National Anti-Scam Centre and developing industry anti-scam codes to enhance collaboration and information sharing across banks, telecommunications, and digital platforms.

In the US, we are looking forward to the launch of the FedNow® Service, which will “proactively tackle real-time fraud”. US banking and finance industries are working to modernize the systems and implement better fraud strategies.

Three-Step Strategy

In order to combat real-time payment fraud, ACI Worldwide included a three-step guideline.

1- Contextualised decisioning and cross-industry collaboration can protect transactions across enterprises.

2 - Machine learning accelerates decision-making, ensuring timely

3 - Two-way communication strengthens the weakest link, allowing banks and financial institutions to send risk signals while maintaining a seamless customer experience.

Earlier this year, ACI introduced a new multi-channel media platform called Inside Real-Time, in which they will share the latest developments in real-time payments.

Countries around the world are hoping their strategies will protect consumers against scammers. We will keep you in the know on the latest strategies companies are using to this end. 

Want to learn more? Check out The Fintech Time’s full write-up here.

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