Payee scams on the rise, says Payments 20

P20 is an advocacy group established to focus on payments globally with the aim of collaborating across borders on the major issues facing the payments industry. The organisation brings together members from across the industry including banks, governments, regulators, and infrastructure providers to collaborate and share thinking, intelligence across borders on combating fraud and criminal transactions, cyber security, and financial inclusion.

The report published this month, ‘Best Practice Approaches for Combating Payee Scams’ highlights the increasing number of payee scams, such as romance scams, purchase, and investment scams across the globe with recommendations to mitigate the issue. Fraud losses from payee scams are a global problem and continue to proliferate around the world. Romance scams, where fraudsters convince payees that they are offering affection or should be trusted with financial matters, are a significant problem during COVID lockdowns, reaching GBP 311.8 million in the UK alone in 2020.

This report evaluates a range of options to help protect customers and banks and reduce the ability of fraudsters to benefit from generic weaknesses in the ‘push payment’ market. Key to this is collaboration across borders and a call for development of a global approach to combating payee scams. Central to the recommendations are improving customer education and awareness, developing better fraud data, detection systems and prevention techniques, collaboration to standardise definitions, and creating a framework for deeper collaboration across the payment industry.

The report was compiled with input and analysis by experts from a range of payment industry partners and advisors including Mastercard, The Clearing House, JP Morgan, NatWest, McKinsey, Hogan Lovells, Fiserv, and Featurespace. The FCA has released figures on what happens to funds garnered by fraud and criminal activity. Each week they estimate that:

• Over USD 70 million is raised to finance terrorism;
• Over USD 6 billion is generated through the sale of illicit drugs;
• Over USD 30 billion is laundered, which only 1% is intercepted and seized.