Authorized Push Payment (APP) fraud has been notoriously difficult to fight against because it involves consumers voluntarily transferring assets to fraudulent accounts. In most cases, bad actors target their victims through social engineering or impersonating a real person or company.
“There is obviously a technology piece that plays a role here, but there’s also a human element, a psychological piece that’s a big part of this,” Tracy Kitten, Director of Fraud and Security at Javelin Strategy & Research, has said about APP fraud. “I think part of what makes resolving the scam issue so challenging, because these are transactions that the users are actually authorizing.”
According to ACI’s Scamscope report, APP fraud is projected to cost the U.S. more than $3 billion by 2027. In an effort to reduce this figure, the Atlanta Fed has released a new report outlining some of the most effective strategies to combat APP fraud.
Useful Tools
Sharing information plays a critical aspect of identifying APP fraud. The Fed’s ScamClassifier, a voluntary tool designed for information sharing, enhances not only detection and reporting but also mitigation efforts within organizations and across the entire payments supply chain. The Fed urges financial institutions and other organizations to register for the service.
In the UK, organizations have adopted the account name verification service Confirmation of Payee, which requires receiving institutions to validate account names before any payment is initiated. The Fed notes this as a potential model for the U.S.
Looking to the Future
The new Nacha rules, set to take effect in mid-2026, require institutions to establish and follow procedures for handling potentially suspicious or fraudulent ACH credits. The goal is to facilitate the quick return of fraudulent transactions. Like ScamClassifier, these new rules encourage a collaborative approach to mitigating ACH fraud, enlisting both sending and receiving financial institutions to combating unauthorized transactions, including APP fraud.
Finally, the Aspen Institute has announced a National Task Force for Fraud & Scam Prevention, which includes the Treasury Department alongside major players like Visa, Mastercard, and Zelle.
