Fraud and Error Prevention: Stopping APP Fraud Before It Starts

Authorised Push Payment (APP) fraud has become one of the UK’s fastest-growing forms of financial crime, with hundreds of millions being stolen each year. Unlike traditional unauthorised fraud, APP fraud exploits human decision-making. Victims are tricked into authorising payments themselves, which is particularly difficult for banks to detect or reverse. For finance teams, the consequences are disastrous, not just financial loss, but loss of reputation, regulatory scrutiny, and collapse of customer confidence. That’s why APP fraud prevention is at the top of every finance director’s agenda.

 

Why APP Fraud and Errors Are So Costly

Once money has been taken out of an account, it tends to be immediately spread over a number of mule accounts, and recovery is virtually impossible. UK companies lost more than £450 million from APP scams in 2024 alone. But the effect of Authorised Push Payment fraud extends far beyond the direct loss of money: it is even greater when reputational and business harm are included.

• Financial impact: Direct costs, higher insurance premiums, regulatory fines, and the expense of implementing new security procedures.
• Reputational impact: Negative media coverage and reduced customer trust following a fraud incident may take years to recover from.
• Operational impact: Employees typically experience higher workloads, audit stress, and additional reporting obligations after fraud.

Even mundane mistakes, like paying the wrong supplier account because of a typographical error, can drain funds and erode finance function credibility. Both fraud and error reinforce the necessity for strong payment fraud prevention measures.

 

How APP Fraud Happens: Common Tactics

Fraudsters are getting smarter. Among the most prevalent schemes are:

• Invoice diversion: Thieves intercept invoices, change bank information, and dupe companies into making the wrong payment.
• CEO fraud: Fraudsters pose as top executives and often employ language that is threatening, implies urgency or confidentiality in order to intimidate staff into making payments.
• Spoofing: Fraudsters utilise spoofed email addresses, websites, or telephone numbers that seem real to trick victims.
• Social engineering: Taking advantage of confidence or imposing time limits, convincing staff to bypass standard checks.

All these tactics target the weakest link in finance processes, the people under pressure.

 

Why Detection Often Comes Too Late

Unlike other types of financial crime, APP fraud relies on the victim’s verification that the payment has been made. If it has been authorised, then the bank will not be able to prevent it. By the time unexplained differences in reconciliations are noticed or suppliers start chasing, the money is gone. Recovery rates are notoriously low, so prevention is the only effective strategy. In order to prevent payment fraud, organisations must infuse protection into their payment operations.

 

Core Controls to Prevent APP Fraud

Staff training & whistleblowing culture

Fraud and risk management is not just about systems. People must be trained to spot red flags and rewarded for reporting them. Creating a whistleblowing culture reduces the chances of scams slipping under the radar.

 

Account Name Verification (ANV)

Bank account name verification is likely to be the most effective first line of defence. By verifying payee names against bank account details, finance teams can prevent misdirected or fraudulent payments. AccessPay’s account name verification integrates seamlessly with finance systems, offering single and bulk checks.

 

Payment screening rules

Intelligent screening rules embedded in payment workflows detect suspicious activity before the disbursement of payments. Triggers may include duplicate payment reference numbers, a payment to unknown creditors, or unusually high transaction amounts. This is an effective payment processing fraud prevention tool that identifies errors and scams early.

 

Segregation of duties & approval workflows

Rigid separation between payment preparation and authorisation reduces opportunities for fraud. Multi-stage approval processes also ensure that no single employee can approve and initiate the same payment.

 

Audit trails and reconciliation

Total visibility of all payments, coupled with timely reconciliations, is required for managing fraud risk. Audit logs provide regulators and auditors with a clear audit trail of activity, while fast reconciliation raises anomalies promptly.

 

The Role of Finance Process Automation

Human error and time pressure are the two main enablers of APP fraud. Automation of finance processes removes these vulnerabilities by embedding controls directly into workflows. Through finance process automation, such as payment checks, reconciliations, and reporting, organisations can eliminate most avenues for fraud before they arise.

• End-to-end process automation in finance integrates back-office and banking systems to reduce manual re-keying.
• Finance process automation ensures that every transaction is subject to the same rigorous checks.
• Automated finance processes decrease not just the risk of fraud but also provide strategic advantages by improving cash visibility.

This is why organisations increasingly want to know which finance processes can be automated to improve resilience. Almost all high-risk manual touchpoints can be replaced with secure digital workflows.

 

Incident Response and Reporting

Even with the best controls, occasionally things will go wrong. When they do, time counts:

1. Act now: Freeze accounts by calling your bank and attempting a recall.
2. Secure systems: Change access credentials and isolate affected systems.
3. Document everything: Record timelines, communications, and payment details.
4. Notify stakeholders: Alert finance leaders, IT, legal, and regulators.
5. Report externally: Report to Action Fraud and the appropriate authorities.

A robust incident plan supports recovery as well as reputational safeguarding. It will also help in providing due diligence when subject to regulatory scrutiny.

 

Regulatory Drivers and Compliance Expectations

The regulatory landscape is evolving rapidly:

• APP Fraud Reimbursement Scheme: Launched in October 2024, this scheme compels some payment service providers to reimburse victims for up to £85,000 of fraud losses.
• PSR Guidance: The Payment Systems Regulator has made Confirmation of Payee checks compulsory for hundreds of organisations.
• Economic Crime and Corporate Transparency Act (ECCTA): In 2025, the ECCTA has introduced the ‘failure to prevent fraud’ offence with unlimited penalties for organisations with inadequate controls.

Together, these changes place great emphasis on risk management and fraud prevention. Business organisations must prove not only fraud threat understanding but also sound fraud risk management procedures.

 

Your 7-Point Fraud Prevention Checklist

Accounting and finance teams can act quickly by focusing on these:

1. Implement account name verification across all payments.
2. Employ payment screening rules to raise red flags.
3. Strengthen approval workflows to enforce segregation of duties.
4. Institute audit trails and reconciliations for transparency.
5. Enforce routine staff training and promote a culture of reporting.
6. Invest in the development of finance automation process improvements.
7. Establish an incident response plan that adheres to regulatory advice.

This simple guide to payment fraud prevention provides finance leaders with a platform for the application of layered defences.

 

Conclusion & Next Steps

APP fraud and data inaccuracies present some of the biggest threats to modern finance teams. With human trust and legacy processes exploited by attackers, the only viable strategy is proactive multi-layered prevention. By combining account name verification, automation, screening rules, and cultural change, organisations can reduce their exposure significantly. The future requires a balance of technology, people, and process. Businesses that invest in risk and fraud management now will not only protect their money but also build customer trust and compliance stamina.

 

Next Step: Book a demo with AccessPay to learn how payments for fraud prevention can be incorporated into your end-to-end process automation finance strategy.