Your Guide to Authorized Push Payment Fraud: Definition, Types, & Impact

Financial institutions often spot criminals targeting systems. Stopping fraud is hard when the person sending funds authorized it, like in Authorized Push Payment Fraud. Fraudsters trick victims through tactics like social engineering.

According to UK Finance, APP scam losses hit £580 million through unauthorized and authorized fraud in the first half of 2023. This stresses the need for strong strategies against evolving fraud tactics.

Now, let's delve into what Authorized Push Payment Fraud is and how it works.

What is Authorized Push Payment (APP) Fraud?  

Authorized Push Payment Fraud is when scammers trick people or businesses into transferring money manually. They pretend to be trustworthy figures like banks or solicitors. These scams are widespread, targeting high-value transactions. Automated fraud is increasing. Victims transfer money without realizing it, leading to significant financial losses.

Globally, APP Fraud is common. It impacts people and businesses. Fraudsters use tricks like impersonation to sneak in payments without victims catching the scam.

Using mobile payment tech on smartphones, Authorized Push Payment Fraud targets P2P (peer-to-peer) apps like Venmo and PayPal. These apps use "push" payments, and fraudsters exploit this simplicity, posing as legit payees. Transactions are hard to reverse, leading to malicious payee app fraud.

With the rise of P2P app use, fraud increases. In 2022, the US FTC (Federal Trade Commission) reported 2.4 million fraud cases, totaling $8.8 billion in losses. Weak banking systems, with Faster Payments, make APP Fraud more common.

Authorized Push Payment fraud requires convincing payers to allow payments under false pretenses. Scammers pose as trusted entities, such as your bank or a company representative. Recognizing that "APP fraud" is a UK-specific term is crucial. Other regions might use different classifications. The Fraud Classifier Model from the Federal Reserve is essential. It helps U.S. consumers detect fraud, regardless of the payment type.

Authorized Push Payment scams are a type of confidence-based fraud targeting the human element in payment processes. ACI Worldwide's report highlights APP fraud as widespread globally. This emphasizes the importance of increased awareness and preventive measures in all regions.

How Does Authorized Push Payment Fraud Work?

APP fraud involves manipulating victims into approving payments to appear legitimate. The fraudster investigates, gathers personal details, and deceives victims, often impersonating trusted entities. Victims unknowingly initiate irreversible payments. The fraudster quickly withdraws funds, making the recovery challenging. 

Criminals also use varied tactics, such as phishing. They also elaborate schemes like romance scams. They exploit a sense of necessity, claiming urgent needs or emergencies. This pushes victims to comply hurriedly. The urgency, misrepresentation, and emotional manipulation convince victims to approve payments. This enables fraudsters to get stolen funds quickly.

Below is how Authorized Push Payment Fraud works:

  1. Deceptive Contact: Scammers pose as trusted entities, often through emails or phone calls.
  1. False Urgency: They create a sense of urgency, pressuring you to act quickly.
  1. Fraudulent Instructions: You receive instructions to transfer money, believing it's a legitimate request.
  1. Account Exploitation: Scammers exploit your trust to access funds directly from your bank account.
  1. No Recourse: Unlike unauthorized transactions, you willingly transfer money, making it challenging to recover funds.
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What are the Types of Authorized Push Payment Fraud?

Authorized push payment fraud comes in various forms, all centered on deception. Here are specific types of scams, each exploiting misrepresentation, impersonation, or social engineering:

1. Invoice Scam

  - Victims pay a fake invoice, misled by social engineering and falsified documents.

  - Targets regular payments or tricks businesses into changing payees.

2. Romance Scam

  - Fraudsters forge romantic connections to exploit victims emotionally.

  - Often culminates in Authorized Push Payment Fraud, with requests for real-time money transfers.

3. Personal Relationship Scam

  - Similar to romance scams, fraudsters impersonate family or friends.

  - Urgency and personal information are used to convince victims to send money quickly.

4. Property Funds Scam

  - Targets property purchases, with fraudsters manipulating payee information.

  - Infiltrates real estate transactions through false documentation and social engineering.

5. Account Takeover Fraud

  - Criminals gain direct access to victims' accounts for fraudulent activities.

  - Enables fraudsters to perform authorized push payments without victim authorization.

6. Contractor Scam

  - Deceptive home renovation scheme where victims pay the fraudster instead of the real contractor.

  - Fraudsters use phishing to gather renovation information, submit a fake invoice, and disappear with the payment.

Understanding these scams is crucial for detecting and preventing authorized push payment fraud.

The Impact of APP on Individuals and Businesses

In fact, individuals and businesses struggle to prevent APP fraud. This can be due to scammers' sophisticated tactics.

According to Finextra, banks paid £207 million of the £479 million APP fraud cost in 2020, making up 43%. This underscores the serious threat APP scams pose to both banks and individuals.
Here is how Authorised Push Payment Fraud affects people and businesses:

  1. Financial Loss: Individuals and businesses suffer monetary losses due to fraudulent transactions.
  1. Emotional Toll: Victims experience stress and emotional distress, impacting mental well-being.
  1. Reputation Damage: Businesses may face reputational harm, eroding trust among customers and partners.
  1. Operational Disruption: Fraud incidents disrupt business operations, leading to inefficiencies and increased costs.
  1. Legal Consequences: Victims may encounter legal challenges, including lengthy processes for recovery.

Read more: What is Enhanced Due Diligence? 

What are Common Examples of APP Scams?

1. Home Renovation Scam

Criminals spot a house under renovation and learn about the homeowner and builder. They send a fake invoice, seemingly from the builder, redirecting funds to their account. The scam is only noticed when it's too late.

2. New Bank Details Scam

Fraudsters target a business, posing as a supplier. They notify a change in bank details for future payments. The company updates the information, unknowingly directing payments to the fraudsters until the deception is discovered.

3. Property Purchase Fraud

Scammers target property buyers, intercepting emails between them and professionals. They alter bank details on crucial documents. During a transaction, funds intended for the property payment end up in the fraudster’s account.

4. Familial Impersonation Frauds

Someone gets a PayPal request, seemingly from a family member in urgent need. Eager to help, they send money without confirming the email. Later, it turns out the family member is unaware, and the funds land in the hands of a scammer.

5. Relationship Scams

Fraud often preys on social media relationships. A person bonding with someone on Instagram is persuaded to send money via Venmo. After the transfer, attempts to reach the "partner" fail; the Instagram account vanishes, leaving the victim deceived and heartbroken.

What are Authorized Push Payments?

Push payments occur when the payer initiates and sends money to the payee. Unlike traditional pull payments, where the payee requests funds, push payments streamline transactions. Authorised push payment examples include:

  1. Cash payments
  2. Direct deposits
  3. Bank transfers
  4. Wire transfers
  5. Digital wallet payments

In general, consumers favor push payments for several reasons:

  1. They enhance security. Payees don't need to disclose personal information or account credentials.

  2. Payers keep control over the timing, ensuring payments only occur with adequate funds.

  3. Push payments are faster than pull payments, thanks to preauthorization, facilitating swift reconciliation.

Read more: What Is a KYC Document?

How to Prevent and Detect APP Fraud with FOCAL

FOCAL is an Anti-Money Laundering and fraud prevention suite. It is designed to help organizations identify and prevent money laundering activities and fraudulent transactions. FOCAL leverages advanced analytics, artificial intelligence, and machine learning to detect patterns and anomalies that may indicate suspicious or illicit behavior. Let’s see how FOCAL can help businesses detect and prevent APP fraud.

1. Real-time Transaction Monitoring

FOCAL keeps an eye on transactions as they happen, swiftly identifying any unusual patterns or suspicious activities, especially in APP-related fraud. This proactive approach, coupled with historical pattern analysis, effectively prevents fraud.

2. Machine Learning (ML) Algorithms

FOCAL utilizes advanced ML algorithms to detect complex fraud patterns. These algorithms continuously learn and adapt, staying ahead of evolving fraudulent schemes and enhancing overall fraud detection accuracy.

3. Increasing Due Diligence

FOCAL empowers businesses to conduct thorough examinations and heightened scrutiny, reinforcing efforts to prevent and promptly identify attempts at APP fraud. This comprehensive approach strengthens overall security measures.

4. Customer Onboarding

FOCAL assists businesses in implementing robust customer onboarding processes, verifying identities at the outset to prevent fraud. While recognizing its importance, FOCAL emphasizes a multi-layered strategy, considering various fraud tactics, including APP-related fraud like Account Takeover (ATO) fraud.


In conclusion, APP fraud poses a serious threat globally, as highlighted by ACI Worldwide's data and GlobalData's projections. The urgency is evident, with 20% of global consumers reporting losses in the past four years. 

Despite regulatory measures, recovery from APP fraud is challenging. Therefore, investing in a fraud prevention solution enables financial institutions to protect their businesses and customers.


Q1. What should I do if I suspect I've fallen victim to APP Fraud?

If you suspect APP Fraud, immediately contact your bank to report the incident. Provide details of the transaction and any relevant information. They can guide you on the necessary steps to secure your account.

Q2. Is there a way to recover funds lost to APP Fraud?

Recovering funds lost to APP Fraud is challenging. However, swift reporting to your bank increases the chances. Banks may investigate, but prevention through cautious transactions is crucial.

Q3. Are there regulatory measures in place to address APP Fraud?

Yes, regulatory measures exist to combat APP Fraud. Authorities enforce strict guidelines on banks and financial institutions. They implement security protocols to safeguard against fraudulent activities, ensuring consumer protection.

Q4. What emerging technologies are being explored to combat APP Fraud?

To combat APP Fraud, emerging technologies like biometrics, AI, and blockchain are explored. These innovations enhance security measures, providing advanced tools to detect and prevent fraudulent transactions, thus safeguarding users.

Q5. How Do Push Payments Differ from Pull Payments?

Push payments involve the payer initiating and sending money to the payee. In contrast, pull payments require the payee to request funds from the payer.

Push payments streamline transactions, while pull payments involve the payee initiating the transaction by pulling money from the payer.

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