Form3, Feedzai launch APP fraud solution for the UK market

The new product is built using fully supervised machine learning, to leverage collaborative intelligence to understand the behaviour of both the payment sender and recipient, to determine the risk of the payment being made in real-time.

Analysing fraud threats on both sides of a transaction

Form3’s new APP fraud solution works by combining its account-to-account (A2A) payment processing with Feedzai's fraud and financial crime analytics. This produces a model that is trained to identify risk in both the individual sending the money and the person receiving the money. Understanding who is receiving the money is key to preventing fraud, as APP fraud involves impersonation that manipulates the victim into sending the money.

This new solution closes the gaps in intelligence that the fraudsters utilise to be able to use faster payments to target UK consumers and businesses. The model is then able to detect 95% of fraud at market-standard false positive rates, as per the press release.

Executives from Form3 explained that the best way to tackle the rise of APP fraud is the use of collaborative intelligence and innovative technologies that allow the real-time identification of scams within the payment message. By bringing together their payment processing expertise, and Feedzai's fraud and financial crime solutions, they can tackle APP fraud so that UK banks can make faster payments safer.

Adapting to new UK regulation

With APP fraud losses accounting for nearly GBP 500 million per year, the solution is timely, as it has been developed on the back of new regulation from the Payment Systems Regulator. This sees victims of APP fraud being refunded by their bank from October 2024, with reimbursement now being the responsibility of both the sending and the receiving institutions.

Officials from Feedzai said there is increasing regulation in this space, and rightly so – they’ve got to take measures to protect the end consumer from APP fraud. With reimbursement becoming mandatory from October 2024, it’s also in the interests of all banks to collectively ensure they prevent fraud and save huge payouts. By combining the expertise of Feedzai and Form3, they can reduce the level of vulnerability in the payment process and give customers the real-time intelligence that they need to stop fraudsters in their tracks.

The service will go live in April, with a full rollout in the UK market expected in the summer of 2024 - ahead of the implementation of the new rules in October 2024.