APP fraud scams involve fraudsters tricking their victims into willingly making large bank transfers to them – in many cases, this happens via social engineering across social media networks or via telephone. The growth of real-time payments has given rise to this new type of fraud, which in many markets is growing at a much faster rate than card fraud.
“Despite educative and preventative mechanisms adopted by banks, stories of victims falling to APP scams continue to be an issue. While there is an increasing awareness of these scams, fraudsters are also evolving their modus operandi. In such a scenario, sufficient flexibility is needed by banks to dynamically define and update the rules that govern risk,”said Ankur Saxena, Country Leader – India & South Asia, ACI Worldwide.
In 2022, 25% of fraudulent transactions in India are valued between Rs 50,001 and Rs 100,000, and a further 19% are valued between Rs 20,001 and Rs 50,000.
Despite the rising concern around fraudulent payment activities, almost a third of the victims in India continue to show high brand loyalty after they have been victims of APP scams and are more likely to choose to keep their account open, the study found.
The study looked at the most prevalent types of APP scams in three geographies – India, US, and the UK. Product (37.8%), Romance (18.4%) and Investment scams (16.3%) are the most commonly reported APP scams across all three markets.
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Sam Murrant, senior payments analyst, GlobalData, said, “Although there are indications that banks are taking the necessary steps to combat the new fraud threat, they must not be complacent regarding these risks. Aside from the direct cost of fraud losses, the lack of regulatory protections around reimbursing consumers for APP fraud losses means there is a potential loss of trust, and thus customers, from APP fraud.”
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