APP fraud losses in the UK decreased by 17% in 2022, but they still accounted for 57% of reported payment fraud cases. Protecting consumers from this threat is becoming increasingly challenging. Neobank Revolut faced regulatory issues for releasing £1.7 million from suspicious accounts, highlighting the difficulties in returning funds to affected consumers. To address this, organizations must prioritize cybersecurity. Research shows that only 36% of businesses and 30% of charities view cybersecurity as a high priority.
The CRM Code, overseen by the Lending Standards Board, offers protections to combat APP fraud. These provisions include preventing fraudulent account openings and cracking down on illicit payments. However, some experts believe a more proactive approach is necessary. Strengthening authentication procedures, educating consumers about fraud schemes, and leveraging advanced fraud detection systems are recommended. Fintech firms should also enhance their due diligence, such as know your customer (KYC) and anti-money laundering (AML) protocols.
Educating both consumers and businesses on recognizing scams and strengthening cybersecurity measures is crucial. Banks must implement robust account and transaction monitoring to detect APP fraud quickly. Open banking has the potential to enhance security measures, with its strong customer authentication and real-time data sharing capabilities. Incorporating open banking’s security protocols, along with regular audits and user education, can contribute to a safer fintech environment.
By FCCT Editorial Team
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