International Fraud Awareness Week: Credit-Push Fraud

Spooky season is behind us, but that doesn’t mean there aren’t still people masquerading themselves as someone they’re not. In fact, people disguising themselves and pretending to be someone else is quite common, especially when there is an opportunity for financial gain.

According to the Federal Trade Commission (FTC), people lost a total of $8.8 billion in 2022 as a result of different types of scams — many of which are carried out through fraudulent activities where a bad actor profits financially from their victim(s) by deceiving them. This type of fraudulent activity can occur in a variety of different ways. The FTC reported that the top scams in 2022 included different fraudulent activity with imposters, investments, business/job opportunities, prizes/sweepstakes/lotteries and online shopping.

Now, when most people think about financial scams or fraudulent activity that results in a loss of money, they probably think of activity that happens without their knowledge or their authorization. However, there is a type of fraud that occurs when a victim knowingly authorizes a payment. This type of fraud is known as credit-push fraud. Let’s talk about it. 

What is credit-push fraud and how is it different from debit fraud schemes?

That’s a good question. You see, debit fraud schemes occur because of an unauthorized payment. This unauthorized payment could be a result of an account takeover, a stolen account or card information or even forged checks. Alternatively, credit-push fraud happens when a sender initiates and knowingly authorizes a payment. This could happen when a bad actor manipulates or deceives someone into believing they are receiving a good or service in exchange for the payment.

Why is credit-push fraud important to discuss?

While debit fraud continues to be a threat, the industry has established preventative measures to help deter and prevent these types of fraudulent activity. However, credit-push fraud is becoming more of a problem because of new technologies and ways to send payments.

Emerging payments, such as peer-to-peer (P2P) payment applications like Zelle, Venmo, Apple Pay, Google Pay, etc., and even the introduction of instant payments like real-time payments and the FedNow^® Service, are making it more difficult for institutions to detect, prevent and recover funds for those who fall victim to credit-push fraud schemes. That’s why it’s critical to be proactive and promote awareness by educating members to be vigilant. And there’s really no better time to promote awareness about credit-push fraud than during International Fraud Awareness Week, which began on Monday, November 13.

Examples of credit-push fraud:

Credit-push fraud can happen any time a consumer, business or organization sends a payment willingly. Here are two examples:

• Someone purchases something online on Facebook marketplace. They send the money over a P2P network, but they never receive the product.
• A bad actor impersonates a vendor and makes a request to change payment instructions. The “vendor” advises the business to send payments to a new account with new information. The business believes it’s a valid request and sends the payment willingly.

In both scenarios, the person or entity sending the money did so willingly; however, there was a bad actor on the receiving end. In the first scenario, the individual who purchased something on Facebook marketplace is out of both the funds they sent and the product they expected to receive. In the second scenario, the business is out of the money they sent, and they still have to pay the vendor that was impersonated to begin with.

How to be proactive to prevent credit-push fraud:

While you can’t always prevent all types of fraud attempts from happening, you can be proactive in trying to prevent credit-push fraud since individuals willingly send the money. First things first, educate, educate and then educate some more.

Your staff should be educated and trained on current fraud scenarios and alerts, so they can recognize the signs of an attempted scheme. The Internet Crime Compliant Center (IC3) is a great resource to utilize to stay up-to-date on the current consumer fraud scenarios and alerts.

But the education shouldn’t stop there because your members also need to be educated. Here are some ways you can accomplish this:

• Provide them with educational resources and tools to help them stay vigilant against credit-push fraud schemes.
• Teach them about the different payment products and the inherent risks that accompany them.
• Encourage them to ask questions about fraud and have discussions on the most common tactics that bad actors are using.

The American Association of Retired Persons (AARP) also offers resources that you can provide to your members, especially your elderly members, to help them stay informed on the types of scams or fraud attempts that are circling. This is also a great resource that your members can use to learn more about scams from fraud experts and those who have fallen victim to a fraud attempt. In addition, I recommend providing your members with tips on how to prevent a credit-push fraud attempt before it even happens. I have some listed below.

Tips to senders to prevent credit-push fraud:

In order to help prevent credit-push fraud, here are some things to consider before sending a payment:

• Only send money to someone you know.
• Make sure to verify the payment — and re-verify, if necessary!
• Talk to someone you trust, and ask yourself, “is it too good to be true?”
• Always treat electronic payments like cash.
• Determine if you’re being pressured to send money. It’s OK to wait until you know for sure.

All in all, your credit union needs to continuously be proactive because fraud is not going away any time soon, especially with the technological developments that occur every day. Not to mention that bad actors are changing tactics and becoming more advanced in their ability to trick people into giving away information they may not otherwise give away.

That’s why awareness and education are so vital to protecting your members and your credit union from all types of fraud attempts, but especially credit-push fraud attempts.

Here are some additional resources you can utilize to learn more:
Consumer Financial Protection Bureau: Fraud and Scams
FTC’s Consumer Advice
MY Credit Union’s Fraud and Prevention Center
Nacha’s Risk Management Framework

Happy International Fraud Awareness Week. I encourage you to read more into credit-push fraud this week and learn more about how you can help protect your members and your credit union from these schemes.

Tarah Sweigart is a payments risk analyst for Vizo Financial. Her role involves supporting the BSA and fraud risk efforts, where she is responsible for transaction review and monitoring, risk assessments and payments related projects. Tarah is an Accredited Payments Risk Professional (APRP) and has mastered the complexities of risk management for ACH, check, wire, debit, credit and prepaid cards and emerging and alternative payments.