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Insights and Expertise

They warn that overly generous refund policies could
U.S. APP fraud overview incentivize carelessness among consumers—or even
lead to an increase in first-party or friendly fraud, where
Authorized push payment (APP) fraud occurs when individuals falsely claim to be victims in order to secure
individuals or businesses are tricked into authorizing a refund.
transfers to scammers, believing the payee is legitimate.
Unlike unauthorized breaches, APP relies on social In response, many banks have ramped up their protective
engineering: impersonation via phone, email or measures. Multi-factor authentication is increasingly
messaging platforms. Once funds are sent, recovery is becoming standard, and there’s been a notable expansion
rare. in the use of behavioral analytics, machine learning and
confirmation of payee (CoP) services to verify recipients
Following are key data points illustrating the scale, risks before funds are released.
and evolving response to APP fraud in the United States:
These tools undoubtedly strengthen the integrity of
Escalating losses payments—but they also introduce friction into what has
become an expectation of seamless, real-time financial
• -2022 U.S. push-payment fraud losses reached ap- transactions.
proximately $2.16 billion, with projections rising to
$3 billion by 2027 – Atlanta Fed Meanwhile, real-time payment providers are facing
• Losses tied to real-time payments (e.g., Zelle, Fed- particularly sharp growing pains. Many smaller firms
Now) are expected to increase from $865 million and niche PSPs that were previously able to compete
(2022) to $2.06 billion by 2028 – Payments Dive on speed and convenience are now struggling with the
• FBI’s Internet Crime Report notes roughly $9 bil- operational and financial demands of compliance. For
them, absorbing liability costs or introducing extensive
lion in U.S. APP losses in 2023, often linked to in- verification layers can mean lost customers, thinner
vestment, BEC, and impersonation scams – Atlanta margins or unsustainable business models.
Fed
Opportunity amid disruption
Fast payments, amplified risks
So, where does this leave us now? There’s no doubt the
• -Zelle users disputed over $206 million in scams in changes have brought greater awareness to APP fraud
2023—victims covered 80% of losses – Kansas City and introduced more robust protections for consumers.
Fed, Market Watch However, the new burden placed on providers has exposed
• Real-time payment systems, while convenient, fa- weaknesses in real-time infrastructure, challenged
cilitate irreversible transfers, making scam recov- traditional business models and opened the door to new
ery difficult – Atlanta Fed, ACI Worldwide types of fraud risks.

Limited liability, rising pressure Ultimately, the advancement of APP fraud policy in the
UK could become a blueprint for other markets. Or it
• Unlike the UK, U.S. consumers typically aren’t re- might serve as a cautionary tale on the risks of moving
imbursed for authorized scams under the Electron- too far, too fast. What’s certain is that the battle over who
ic Fund Transfer Act – Atlanta Fed pays for fraud—and how it can be prevented—has only
• However, some platforms (e.g., Zelle via Early just begun.
Warning Services) are initiating reimbursements
for imposter scams – Atlanta Fed, Market Watch Roger Alexander serves as a key adviser to Chargebacks911’s Advisory
• Enforcement actions: the CFPB sued JPMorgan, Board and its CEO, Monica Eaton, assisting the company with its expan-
BofA, and Wells Fargo over $870 million in alleged sion initiatives, including the highly-anticipated launch of its dispute
Zelle fraud – Reuters resolution solution set to address the record spike of authorized push
payment (APP) fraud claims. Alexander has previously served in vari-
Industry response ous leadership roles within the payments and financial services sectors,
including directorial roles at Barclays and subsequently as the CEO of
• Financial institutions are deploying stricter verifi- Switch (the UK’s debit card) and president of Elavon Merchant Services
cation, multi-factor authentication, and AI-driven Europe. He is currently a strategic advisor for Tarci and Pennies, a major
monitoring to counter APP threats – ACI World- UK charity. To learn more, visit: https://chargebacks911.com. Contact
wide, Payments Dive Roger Alexander via LinkedIn at https://www.linkedin.com/in/alexan-
• NACHA’s upcoming 2026 ACH fraud rules will re- derroger/
quire both ODFIs and RDFIs to monitor and poten-
tially delay suspicious transactions

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