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Payment Industry Report Calls for Collaboration to Combat the Problem


Payments 20 (P20) is calling on the industry to work together to combat payee scams which have increased exponentially since the start of the Covid-19 pandemic in 2020.

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 £311.8 million in the UK alone last year.

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, J.P. Morgan, NatWest, McKinsey & Co., 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 $70 million is raised to finance terrorism.
  • Over $6 billion is generated through the sale of illicit drugs.
  • Over $30 billion is laundered, which only 1% is intercepted and seized.

Duncan Sandys, Chief Executive Officer at P20, said: “Payee scams were a growing problem before the advent of COVID-19, but the pandemic has seen incidents rise at an alarming rate. As the world moved overnight to operate remotely and digitally, so did the fraudsters.

“Governments, regulators and the industry approach this issue differently and although there are some common elements, there is little harmonisation. For instance, the UK has been collecting and publishing data since 2017 and so is able to release very detailed statistics on the pandemic’s effect on various payee scams.”

Steve Ledford, Senior Vice President for Product and Strategy at The Clearing House, said: “As we developed these recommendations, we began using our findings in real time in our own payment systems and so consumers and the industry have begun to benefit before the ink on this report was dry.”

Click here to read the full report.

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