Authorized Push Payment Fraud and Its Impact on Businesses

In the dynamic world of digital transactions, a rising trend that is causing significant concern is Authorized Push Payment fraud. This type of scam, which manipulates victims into transferring money to a fraudulent account, is becoming increasingly prevalent.

As businesses increasingly leverage peer-to-peer payment systems and fast bank transfers, the risk of falling victim to APP fraud escalates. In this article, we delve into APP fraud, its various manifestations, and how businesses can mitigate these risks.

Understanding Authorized Push Payments

Authorized push payments (APPs) are transactions wherein the account holder instructs their bank or payment provider to send money directly from their account to another. This process is usually initiated via online banking, phone banking, or peer-to-peer payment platforms.

To better comprehend APPs, it’s beneficial to contrast them with pull payments. Unlike push payments, pull payments are initiated by the payee, who requests money from the payer’s account under a pre-authorized agreement.

The critical difference lies in control over the transaction. In a push payment, control rests with the payer, while in pull payments, the payee dictates when to pull funds from the payer’s account. This variance in control significantly influences the fraud risk associated with each payment method.

Authorized Push Payment Fraud Explained

Authorized Push Payment Fraud is a form of payment scam where a criminal tricks individuals or businesses into making a push payment to a fraudulent account. The scam typically involves impersonating a trusted entity, such as a bank or a service provider, to manipulate the victim into authorizing a payment under pretenses.

A significant consequence of the push payment process is that once executed, it cannot be easily revoked. The bank, assuming the transaction is legitimate, completes it instantaneously. Once the money reaches the recipient’s account, reversing the transaction is usually impossible, especially if the recipient quickly withdraws or transfers the funds.

KYC Hub Transaction Monitoring Solution

Types of Authorized Push Payment Fraud (APPF)

APP fraud can manifest in various ways, each presenting unique challenges for detection and prevention. The common thread across all types is the fraudulent manipulation of the victim into authorizing a payment to an account the scammer controls.

Here are some common types of APP fraud:

Purchase Scams

In this scenario, the victim pays in advance for goods or services that do not exist. The scammer disappears once the payment is made, and the promised goods or services are never delivered.

Advance Fee Scams

Victims are asked to pay a fee to access a service or prize, which never materializes. Once the payment is made, the promised reward never comes.

CEO Fraud

Also known as Business Email Compromise (BEC), this type of fraud involves impersonating a senior executive and persuading an employee to make a payment for business purposes.

Investment Scams

Frauds of this kind trick the victim into making an investment that does not exist. The victim transfers money to the scammer’s account, only to discover the investment was fictitious.

Romance Scams

The scammer pretends to be in a romantic relationship with the victim. They manipulate the bond to convince the victim to transfer money. Once the money is sent, the romantic partner disappears.

Invoice Fraud

The scammer pretends to be a supplier or service provider and sends fake invoices to the business. Alternatively, an invoice fraud scam might intercept a genuine invoice and alter the bank account details, causing the business to unknowingly make a payment to a fraudulent account instead of the actual supplier.

Property Purchase Scams

Property scams involve intercepting communications between customers and their conveyancers, realtors, and/or lawyers. The fraudster claims to represent a relevant party to the transaction, convincing the victim to transfer funds to a fraudulent account.

Mitigating APP Fraud Risks

Mitigating the risks of APP fraud requires a combination of technological solutions, educational initiatives, and robust operational controls. Here are some key strategies businesses can use:

Customer Education

Inform customers about the nature of APP fraud, how to recognize potential scams, and how to protect themselves.

Transaction Monitoring

Monitor transaction patterns to identify unusual activity that could indicate fraud.

Transaction Delays

Introduce time delays for high-value or unusual transactions to provide a window for additional checks.

Confirmation of Payee (CoP)

Implement CoP systems that compare the recipient’s name against account details, ensuring that the right person is paid.

Account Takeover Fraud Prevention

Addressing Account Takeover (ATO) fraud is often a precursor to APP fraud. An ATO prevention solution quickly detects and responds to potential account takeovers, preventing bad actors from initiating fraudulent transactions.


Authorized push payment fraud is a significant threat in today’s digital payments landscape. However, with customer education, advanced fraud detection systems, robust transaction monitoring software, and proactive account takeover prevention measures, the risk can be significantly reduced.

AML Solution

KYC Hub’s AML solutions can help businesses mitigate fraud risks and tackle money laundering. Providing a comprehensive suite of tools, KYC Hub equips businesses with the necessary capabilities to detect, prevent, and respond to fraudulent activities, ensuring secure transactions and enhanced customer trust.

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