Our Programme Manager for fraud, Maria Kiero-Watson, recently discussed the challenges and opportunities faced by the payments industry in safeguarding both consumers and merchants against fraud at the FTT Payments conference in London.
Attended by representatives from across the payments ecosystem, the one-day event, ‘Navigating complexity and charting a pathway to the future of payments’, explored key topics affecting the rapidly-evolving payments landscape, including digital transformation, the changing needs of consumers and businesses, and secure and inclusive payments solutions.
During the speaker session ‘United against fraud: Collaborating to safeguard consumers and merchants’, Maria and the panellists discussed:
- The current state of fraud prevention, highlighting what measures are effective and where challenges remain
- Perspectives on both the problem of fraud and potential solutions
- Emerging strategies and technologies being developed and implemented to fight fraud more effectively.
Fraud prevention successes
Referring to the billions of pounds saved, millions of customers protected, and thousands of criminals stopped, the panel agreed that there has been significant success in the prevention of fraud in the UK, in recent years. Whilst payment scams continue to be a problem, there is a call to shift the narrative towards celebrating successful fraud prevention efforts to build consumer trust in the payments industry.
In support of this, Maria highlighted the successful adoption of Pay.UK’s Confirmation of Payee service, which helps to reduce misdirected payments and provides greater assurance to end users that their payments are being transferred to, and collected from, the intended account holder. Since launching in 2020, the service has consistently proved to be a valuable and effective anti-fraud tool and has become an integral element of the payment process for end users, with 99% of all Faster Payments in the UK now covered by the account name-checking service.
Looking forward, Maria explained that although Pay.UK’s focus is very much on the domestic UK payments ecosystem, there is potential to expand Confirmation of Payee to new areas, including international (such as Australia, which has its own Confirmation of Payee service, and the European Union with Verification of Payee) and third-party (such as to school meal payment applications).
The realities of data sharing
The speakers then discussed how the term ‘data sharing’ is quite broad, especially in relation to fraud, which can have various meanings and purposes in different sectors. For example, scams related to payments are different to scams in the cybersecurity sector, and these differences can hinder effective data sharing for combatting both types of fraud. Organisations should be encouraged to move away from the concept of data sharing and instead focus on the sharing of problem statements, such as fraud vulnerabilities and challenges, which can then be solved through discussion and ultimately, through the sharing of data. This ensures that outcomes are more tailored to the problem and facilitates more effective and practical collaboration.
Maria supported the argument for a more problem-solving approach to data sharing and highlighted that the main challenge is how we work with Data Protection Officers to produce secure and compliant data sharing agreements. Using independent and trusted third-party facilitators, like Pay.UK, can play a critical role in overcoming the legal and logistical barriers to data sharing between different organisations, industries and sectors.
The panel agreed that pilot projects and proof of concepts can also be used to assess the feasibility of data sharing initiatives, refining processes and building momentum before full-scale implementation.
Next steps
Building on the positive narrative around fraud, the panel discussed the need to address the full fraud chain of events. Most people are aware of the impact of fraud when it is successful but are they aware of what happens next? One of the key things we can do as an industry is work with law enforcement organisations to understand the fraud prosecution process, so that we can educate consumers, celebrate justice where served, and continue to build trust. This can be reinforced through the reframing of language around those who have been affected by fraud, for example, from “you fell for a scam” to “you were a victim of fraud”, ultimately improving reporting and engagement rates.
Maria also highlighted the increasing importance of consumer education around fraud and the tools in place to prevent it. Naturally, consumers want their transactions to be as frictionless as possible but lack understanding around the reasons why anti-fraud systems cannot make this wholly achievable. Maria explained that consumers should all take a certain degree of care when making transactions and should educate themselves with regards to the tools that can help protect them, for example, Confirmation of Payee. However, we have a collective duty, both within the payments industry and across sectors, to educate and safeguard those vulnerable individuals who are unable to identify fraudulent requests and activity.
Conclusion
In conclusion, the speakers emphasised that a fundamental shift in mindset is essential to building consumer trust and enhancing collaboration in the fight against fraud. By fostering open dialogue and sharing challenges across industries, we can unlock the potential data to deliver improved fraud prevention outcomes. To sustain trust in the payments ecosystem, it is crucial to celebrate successful fraud interventions, acknowledge instances where justice is served, and use language that supports victims rather than assigns blame. Finally, there is a collective responsibility across all industries in the payments ecosystem to educate and protect consumers, particularly those most vulnerable to payment scams.
