A fraudster will deceive their victim into sending money straight from their account to an account under the criminal’s control in an Authorized Push Payment (APP) fraud.
Fraudsters use multiple methods to deceive the victims. Following are the common APP fraud scams.
Prevalent APP Fraud Scams
Investment Scam: Fraudsters convince their victim to move their money to a fictitious fund or to pay for a fake investment. 10,085 investment scams were filed amounting to £114.1m in 2022 . £57.2m was lost in the first half of 2023.
Impersonation Scam: Fraudsters, pretending to be either police or bank , convinces the victim to make a payment to an account they control. In the year 2022 16,948 impersonation scams amounting to £109.8m were filed. In the first half of 2023 £43.5m was reported as lost.
Purchase Scam: Victim pays in advance for goods or services that are never received. In 2022 117,170 purchase scams were filed amounting to £67m. In the first half of 2023, £40.9m was reported as lost due to purchase scams.
Invoice Scam: Victim attempts to pay an invoice to a legitimate payee, but the fraudster intervenes to convince the victim to redirect the payment to an account they control. In 2022, 3,340 purchase scams were filed amounting to £49.5m. The reported invoice scam fraud amounts to £24.8m in the first half of 2023.
Advance Fee Scam: Fraudsters convince their victim to pay a fee which they claim will result in the release of a much larger payment or as a deposit for high-value goods and holidays. 27,329 purchase scams were filed amounting to £32.2m in the year 2022. In the first half of 2023, £15.1m was reported as lost.
Data as reported by UK Finance for the year 2022 and 2023
How financial institutions can mitigate APP and mule account frauds
Collaborative Approach and Information Sharing: Banks should foster collaboration and information sharing among themselves to identify and mitigate emerging fraud patterns. Banks can share information on identified bad actors and mule accounts and collaborate with other financial institutions and law enforcement agencies.
Acting in Real-time: With the new instant payment schemes coming in across the globe such as SEPA Instant Payment, UPI, etc. It becomes very crucial for the banks as well to keep up their fraud detection systems in pace with the speed of payments. It is important for the banks to act in real-time to detect fraudulent activities originating from channels like payment cards, internet banking, mobile banking, etc.
Graph Enabled Investigation Workbench to detect hidden linkages between Mule Accounts
Clari5 provides Graph Intelligence Solution – a powerful visual investigation solution to assist the investigators with
- Money flow patterns that reveal hidden linkages between customers, accounts and transactions through multiple accounts – it uses large volumes of transactions – to create linkages of money flow in and out of the accounts, with drill downs available for any next account to see mule account behavior, round tripping of transactions across a group – presenting the complex, yet complete web of money trails, thereby empowering investigators during financial crime investigation.
Connect with us to discuss more on APP and mule account frauds.
