Fraud Protection & Compliance:

Enterprise Payments Fraud

FICO 2023 Scams Impact Survey

Balancing fraud protection

and customer experience
while fighting scams

Survey
 Executive Summary
Real-time payments (RTPs) have been adopted at a rapid rate
since at least 2018. According to FICO’s latest global survey,
90% of the more than 14,000 consumers from 14 different
countries polled have sent an RTP, 38% use RTPs more than five
times per month, and 88% plan to maintain or increase use of
RTPs in the coming year. Unfortunately, a global wave of scams
has paralleled RTPs’ rapid adoption, leaving more consumers
suffering significant losses.
In January 2023, FICO conducted a global survey of
Globally, 68% of consumers have received an unsolicited text,
more than 14,000 consumers in 14 different countries
email, or phone call they thought was part of a scam, and
to determine perceptions and impacts of scams. In
20% of consumers sent an RTP for goods or services they never
this report, we take a close look at the results, and
received. 51% responded that friends or family had been victims
what they say about how people are using real-time
of a scam, showcasing the pervasive and persistent nature of
scams in the new RTP landscape. payments (RTPs) and the relationship between RTP
and scams. We also explore what customers think
Banks face a series of risks related to RTP scams, including loss banks could do better to protect them from scams,
of reputation, loss of customers, and new liabilities, such as cost who they think is liable if they make a scam payment,
to manage fraud cases and potential reimbursement of scam and how banks can address these issues with analytics,
victims. In fact, two-thirds (67%) of consumers worldwide think artificial intelligence (AI), and workflow automation.
banks should be required to reimburse scam victims most or

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all of the time. The trouble for banks, however, is that 55% of
consumers think RTPs are as secure as credit cards, as do 70%
of past RTP scam victims. This is a hurdle banks face in pushing
back against scams.

Customers expect banks to do more to protect them from

scams, with most desiring improved fraud detection systems,
and more live warnings and alerts during any RTP process.
And while most customers say they would prefer banks not
implement a holding period for large transfers or decline
suspicious transactions outright, 70% say they would feel
positive if their bank declined a payment because of a scam.

Banks have an opportunity to take a proactive approach to

scams detection and prevention. By educating customers about
existing and emerging scams, incorporating cutting edge AI-
and ML-powered scam detection technology, and proactively
engaging customers with two-way communication in the
channel of the customers’ choice, banks can effectively balance
fraud protection and customer experience.

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Section 1

Real-time payments
adoption explodes globally
Real-time payments (RTPs) are the fastest growing way How often do you use real-time payments?
for people and businesses worldwide to exchange funds.
The Clearinghouse, which provides the predominant RTP
platform in the United States, reports that since 2018, RTP 38%
volumes have grown quarterly by 10% or more for 16 consecutive
quarters. Globally, the RTP market is projected to grow at a
nearly 35% compound annual growth rate (CAGR) to more
19% 19% 19%
than $190 billion by 2030.

FICO’s latest global consumer fraud survey also shows that 6%

RTPs are immensely popular and in widespread use worldwide.
Across the 14 countries in our survey, 90% of consumers report Up to 1 to 5 5 to 10 More than Never
having sent an RTP while a similar 87% say they have received 1 time times times 10 times
per month per month per month per month
an RTP. Nearly two of five consumers surveyed (38%) say they
send and receive RTPs more than five times per month, while
another 38% use RTPs more than one, but fewer than five times
per month.

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How are people using RTPs?
In our survey, 84% indicated they use RTPs to pay or How do you use real-time payments?
send money to other people, while 57% say they use
RTPs to make payments to businesses, and 32% using
RTPs to pay people from their business. S&P Global
84%
Market Intelligence reports that in the second quarter
of 2022 alone, real-time payroll payments more than
doubled compared to the prior quarter and accounted 57%
for nearly 15% of total RTP volume. Fraud fighting
professionals should be aware that increasing growth 32%
in B2P payments could be a major avenue for fraudsters
to exploit in the future.

Pay a person Pay a business Pay from business

to person

5
Customers will use RTPs even more
RTP usage shows no signs of slowing either. Our survey finds that 88% Will you use RTP more or less
of consumers expect either to increase their use of RTPs in the coming
in the next 12 months?
year or to continue at their current rate. But there are clear regional
differences in expected growth.

In India, for example, where 61% of consumers already use RTPs more 4%
than five times per month, 82% say they will yet increase their use of 7% Less
Don’t know
RTPs this year. Similarly, in Türkiye 45% of consumers use RTPs more than
five times per month but 63% plan to use RTPs more in the coming year.

Conversely, markets like Germany and the United States show lower
growth trajectories. In Germany, 84% of consumers have used RTP, but
only 25% of consumers plan to use it more this year. In the United States, 36% 52%
No change More
81% of consumers have used a RTP, but only 31% plan to use it more this
year than last.

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Section 2

Scams rise worldwide, impacting everyone

With the rapid growth of real-time payments (RTPs) has come a wave of scams so Have you ever sent a RTP and
threatening that UK Finance Managing Director of Economic Crime Katy Worobec
not received the goods?
has declared “the level of fraud in the UK” to be “a national security threat.”

The UK Finance report reveals that nearly £250 million of UK fraud losses in 2022,
or 41%, were authorized push payment (APP) fraud, where customers are conned into 3%
sending funds via RTP to criminals. The scenario is not better in the United States; Don’t know
20%
according to the latest data from the US Federal Trade Commission (FTC), Yes
US consumers reported losing $8.8 billion in scams in 2022, a 30% increase over 2021.
Most common were impostor scams, where consumers or businesses are conned into
sending money to criminals that falsely impersonate a legitimate person or business.

Our survey found that globally, 68% of consumers have received an unsolicited text,
email, or phone call they thought was part of a scam, and 20% of consumers sent an
RTP for goods or services they never received. But in India, this occurrence spikes to
45% of consumers. India is experiencing its own wave of impersonation and APP fraud
scams, with losses expected to increase from $330 million in 2021 to more than $600 77%
No
million by 2026.

As losses mount, there is an increasing risk that banks will be held liable for APP related
to scams. Regulatory scrutiny is increasing across the world, and consumers do not yet
have a great understanding of how secure — or not — their RTPs really are.

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Consumers misunderstand on RTP security
Despite how costly scams can be for consumers, there appears to be a How secure are real-time payments
high level of awareness that scams exist. More than two-thirds (68%) of compared to credit cards?
consumers say they’ve gotten cold outreach that appears to be a scam,
like a sketchy text, email, or phone call. More than half (51%) believe their
friends or families have been victims of scams.
5%
Unfortunately, consumers are not connecting the dots between the rise in Don’t know
scams and the immediate and irrevocable nature of RTP.
Our survey shows 55% of consumers believe an RTP is more secure than a
credit card transaction. 75% of consumers believe RTP processes already
include plenty of security checks, a figure which increases to 79% among
35%
consumers who have reported fraud in the past. About the 55%
same More
While security is a top concern for RTP providers, the fact that it’s ultimately secure
the authorized user being manipulated into sending payment illustrates just
how deceptive APP fraud can be. And because RTP doesn’t have many of
the same protections that credit cards do (limitations of liability, chargeback 5%
features, etc.), the impact of sending payment to a scammer is just like Less secure

handing over cash — once that money is gone, there is a low probability of
getting it back.
This begs the question: Do customers think banks are doing enough to
protect them from scams?

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Section 3

Are banks doing enough?

When asked whether banks are fair with victims of a scam, Is your bank fair with scam victims?
49% of consumers say yes, though 22% say they are not —
the remainder are not sure.
In some markets, such as Malaysia (34%), Peru (32%), and
29%
Colombia (29%), higher percentages of customers do not Don’t know
think banks are fair with scam victims, which should be a
concern for banks working to balance fraud protection and
customer experience. 49%
Yes
In India, a market whose consumers experience more fraud
than most, only 15% of consumers think banks are not fair
with scam victims. In fact, 76% of consumers in India say their
banks are fair with scam victims, suggesting the challenge 22%
can be addressed. No

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Questions of education, liability
Globally, banks have an opportunity to continue Should your bank refund victims when they are
to educate their customers about scams. 58% of scammed into sending real time payments?
customers believe banks are providing enough scams
education, but 31% disagree and want to see more.
In fact, more than a third of customers in Canada
(45%), Spain (37%), Malaysia (36%), Peru (38%), and
Colombia (37%) think banks could provide more Always 36%
scams education.
Another crucial question is whether banks should Most of the time 31%
be responsible for reimbursing or compensating a
consumer or business in the wake of a RTP scam. Only rarely 18%

In the global response set, two-thirds or more of

customers have decided: 36% say banks should Don’t know 10%
always have to reimburse customers, and 31% say
they should most of the time. Just 24% say banks Never 6%
only rarely or never should be responsible. Only in
Indonesia do 49% of consumers believe banks should
never or only rarely be responsible for compensating
victims of RTP scams.

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 How will customers respond?
While most customers might expect a bank to refund them or a friend in the wake of a scam,
how they will react if not satisfied with the bank’s response is as important to understand.

52% 23% 13%

Complain to the bank Complain to regulators Change banks

More than half of all consumers Nearly a quarter (23%) of consumers Despite how complex it can be to do
surveyed (52%) will complain to their will complain directly to regulators so, more than 1 consumer in 10 (13%)
bank if they do not like its response if they are unhappy with a bank’s will change banks if unhappy with
to their fraud case. With incidents response to a scam. With data their financial institution’s response
of scams rising year over year, the showing two-thirds of consumers also to fraud. Consumer defection and
incidence of inbound complaints believe banks should be responsible acquisition are costly for banks,
about scams is going to rise, making for reimbursing victims, the stakes are and this does not even account for
poor fraud management responses rising on these types of complaints. customers who may maintain but
increasingly expensive. cease to use an account.

The key for banks is to find the delicate balance between fraud protection and customer experience to minimize
the number of cases that result in customers who are dissatisfied with the process.

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Section 4

What can banks do to combat scams?

Our survey asked what customers thought banks should do to protect them from scams. Their top five responses provide a solid
map for banks to follow to counter real-time payment (RTP) scams and care for victims when fraud incidents occur.

Improvement % In favor Path to solution

Financial institutions (FIs) can use new artificial intelligence (AI) models, machine learning (ML) tools,
and scoring methods, including retail banking models with scam detection score. The right technology
Have better fraud detection 77% can help detect scams sooner and drive real-time actions, such as sending live warnings or pausing/
stopping fund transfers.

Provide more warnings When customers are aware of frauds and how they work, they are less likely to fall for them, but
they need reminding. Banks should use real-time communications capabilities to send key messages
about emerging scams 65% throughout the customer lifecycle. These can include alerts when customers make payments related
when making payments to the most common scams of the day.

Communications and decisioning capabilities can also apply during the payment process.
Give more warnings For example, a transaction that is flagged by real-time fraud detection as risky can trigger
while making payments
57% a real-time notification to the customer of a likely scam. When customers have been so notified,
just 16% have continued to send an RTP.

More collaboration with To combat fraud, collaboration should include live data exchanges. Telecom, cloud, social media,
and financial service providers collectively possess a holistic view of the fraud environment.
telecoms, banks, and 46% More data shared, analyzed, and incorporated into fraud management means better results and
social media platforms improved customer experience.

Nearly half of all consumers think a brief holding period is a good idea for high value transactions, such
Use a cool-off period as those that exceed an average month’s pay. Using analytics-based decisioning and rules-driven work-
for bigger payments
45% flow automation, banks can trigger holding periods for payments above a specific threshold to allow
customers to reconsider, or for further fraud investigation.
Large payments, high risk
When asked whether they want banks to decline payments defined
as high-risk, only 38% of consumers said they think it should be part
of the scam protection process. In some geographies, however,
customers would like to see banks decline high-risk RTPs. In Malaysia
and South Africa, more than 45% think it’s a good approach for
scam protection; in Spain, Indonesia, and the Philippines, more than
40% of customers feel the same.
Since customers say they enjoy the ease of use, speed, and
accessibility of RTPs, the overall sentiment toward declining
payments is easy to understand. But when asked how they would
feel if their bank stopped a real-time payment because of an active
scam, 70% of consumers would feel positive and only 6% negative.
This paradox may be a result of the “ask for forgiveness rather
than permission” approach. It also suggests banks will better
satisfy most customers if they can prevent payments from
going to scammers — even if customers made them willingly and
deliberately — as long as banks clearly and effectively communicate
why a payment was declined.
Engage and communicate with customers
Banks have a limited window to prevent a customer from becoming How would you want to be notified that
a scam victim. Proactive, real-time, two-way communication in
your payment could be a scam?
the customers’ preferred channels is one of the best ways to keep a
customer safe.
At a macro level, 82% of customers prefer three main channels —
29% prefer a phone call; 28% prefer a message or notification from
their banking app; and 25% still prefer a text message. By contrast, Phone call 29%
just 11% of customers prefer email and only 5% a third-party
messaging app when it comes to fraud alerts. Bank app
28%
notification
These preferences do vary by country, which is a reminder that
personalization is, in fact, personal. For example, in Indonesia, 21% Text message 25%
of customers prefer to receive a scam alert through a third-party
messenger, like WhatsApp, and just 11% prefer a text message. Email 11%
In the US, by contrast, 46% prefer a text message and less than 1%
prefer a third-party messenger. 3rd party
5%
message app
Whichever channel customers prefer, their strong preference
appears to be for real-time communication. Taken together with Don’t know 3%
their other suggested improvements and survey findings, customers
want to continue to use RTP; they want to know when scams are
happening; and as much as they would like to control what happens,
they will appreciate it if their bank intervenes to protect them from
a scam.
Section 5

Key takeaways
Customers In every country surveyed, at least 80% of consumers have sent an RTP. In 9 of our 14 countries, more than
love real-time 90% of consumers — and as many as 98% (India, Philippines) — have done so. Globally, 88% of customers
payments plan to maintain (36%) or increase (52%) use of RTP over the next 12 months. This is a rapidly growing global
(RTPs) phenomenon, with significant impacts in terms of transaction volume, transaction value, and fraud loss.

Scammers are finding endless ways to leverage RTPs’ ease of use to their benefit. Scams are now
RTP scams considered a national security threat in the UK, and have increased 30% in 2022 over 2021 in the US.
are hurting While a majority of losses are smaller values, occasional scam payments can involve life-changing
customers sums of money. The instant, irrevocable nature of RTP means that once a customer sends a scammer
increasingly a payment, that money is gone, with little recourse available to recuperate the loss.

Customers do Just 24% of customers worldwide have reported losses from scams to their banks, but 51% believe
not effectively their friends or family have been scammed. More than half of consumers (55%) believe RTPs are more
understand secure than credit cards, though credit cards often provide liability coverage that RTP channels do
the differences not. And despite the rise in scams, 75% of customers believe RTP processes have plenty of security
between card checks. While overall scam awareness seems high, consumer would benefit from more nuanced and
payments clear communication about the nature of RTP.
and RTP

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Key takeaways
Customers want When asked directly, most customers believe their banks could do more to improve their defenses
fraud detection, against scams through better fraud detection (77%) and more warnings about scams in the payment
warnings, and process (65%). Fewer customers are enthusiastic, however, when asked about cool-off periods for larger
reimbursement payments (45%) or declining high-risk payments outright (38%). And despite some resistance to being
prevented from sending RTPs to scammers, 67% of consumers worldwide think banks should reimburse
scam victims most or all the time.

Banks can make When customers are unhappy with how a bank responds to their being scammed, 52% will complain
customers happy to the bank, 23% will complain to regulators, and 13% will change banks. The best defense for banks
by protecting should be to prevent scams from happening in the first place. And though most customers will say they
them actively do not prefer to see RTPs held or stopped, 82% want to be notified immediately by phone call, text, or
against scams banking app notification if there is a suspected scam involved in a payment. 70% say they would feel
positive if their bank stopped an RTP due to a scam.

Customers ultimately expect their banks to provide a final line of defense against scams that emphasizes
identification, communication, and prevention. But they are also sensitive to the customer experience benefits,
such as ease of use and speed of transfer, which they enjoy most about RTP. Banks that can help deliver the careful
balance of delightful CX with best-in-class scam protection will emerge as the leaders in the new RTP landscape.

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Section 6

How FICO helps

Your customers are going to continue to embrace RTP. To give them
the best experience with the least impact from fraud, you need
innovative, powerful solutions that can help identify and stop existing
and emerging fraud threats.
FICO® Platform gives you access to patented, real-time,
ML-powered retail banking and scam detection models that
can identify scams, as well as unauthorized transactions
from third-party or account takeover (ATO) fraud. Using
sophisticated technological solutions, including self-calibrating
outlier analytics, behavior-sorted lists, and multi-layered self-
calibrating analytics, FICO can give you the tools to stay in
front of emerging scams before they can impact customers.
These models are available out of the box and will deliver
immediate value, and they are continually updated with
data from more than 9,000 contributing banks around
the world. That rich and unparalleled dataset means FICO
models catch more fraud, faster, and won’t degrade over time.
Customer communications is also a vital part of scam prevention.
Two-way, real-time interactions with your customers, in the channels
of their choice, can make all the difference in stopping someone from

17
sending a scammer an RTP. With FICO® Platform, you can use
communication capabilities to verify a legitimate transaction
from a fraudulent one, and you can put the right amount of
sensible friction in place to help a consumer think critically
before sending money to a criminal.
The best scam prevention strategies and tactics are only
as good as your ability to measure their impacts. With FICO
Platform, you can test, simulate, and compare different
strategies to understand potential impacts before you move
them into production. And once you have your optimal strategy
deployed, you can create and manage diverse reports that help
you articulate the value and impact of your chosen strategies to
the business.
Scam prevention is just one of the many facets of an effective
enterprise fraud management strategy. And enterprise
fraud management is just one pillar of a successful overall
organization. FICO Platform lets you take full advantage of re-
usable features and cross-functional capabilities to apply data
when and where it’s needed, as well as execute decisioning, rules,
escalation parameters, and more. From scam fraud prevention,
card fraud prevention, and customer identity verification to
originations, onboarding, and more, FICO Platform delivers
applied intelligence, when and where it matters.

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