Daily Dash: Well, I’ll Be Scammed!

April 28, 2023
New research has revealed that over half of consumers blame themselves for instant payment scams, while the Swiss have agreed to launch a public-private partnership to tackle anti-money laundering.

60 Percent Of Instant Payment Scam Victims Blame Themselves For Being Scammed

A report by fraud prevention company FICO found that 59 percent of consumers who sent a real-time payment (RTP) to a scammer feel that they are responsible for falling foul of the scam.

The report found that an overwhelming majority of Americans (81 percent) have sent a real-time payment. This shift in payments channels correlates to an increase in fraud, with almost three-quarters of Americans (72 percent) saying they received an unsolicited text, email, phone call or other outreach they thought was part of a scam. 

Nearly half (43 percent) admitted their family and friends have been victims of scams.

The report also highlights that customers do not effectively understand the differences in protections between card payments and RTP and more than half of consumers (55 percent) believe RTPs are more secure than credit cards.

AML Public-Private Partnership Gets Go Ahead In Switzerland

Switzerland’s Federal Council has confirmed that the Swiss Money Laundering Reporting Office at the Federal Office of Police will develop a strategic partnership for the purpose of sharing information between the public and private sector, in order to combat terrorist financing and money laundering.

“Today, 20 of the 30 most important financial centres in the world have already established public-private partnerships and have had positive results, in particular with regard to prevention,” the Federal Council said in a statement after the agreement. 

This follows on from a report submitted to the political representatives. 

According to the Federal Council, the financial sector supports the introduction of a public-private partnership and has signalled its willingness to actively contribute towards developing one.

US Agencies Brace Up Against AI Discrimination

A joint statement by the US Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC), Justice Department and Equal Employment Opportunity Commission warns that artificial intelligence (AI) may lead to outcomes that result in unlawful discrimination.

While the statement acknowledges that AI and automated decisions can improve products and services such as home valuation, lending and marketing at lower costs, the organisations caution that it must be done in a responsible way.

According to CFPB director Rohit Chopra, a statistical analysis of 2m mortgage applications found that Black families were 80 percent more likely to be denied by an algorithm when compared to white families with similar financial and credit backgrounds.

The use of AI is “not inherently bad”, Chopra said, but firms must avoid “creating black box models” and should carefully study the data inputs for bias.

“We already see how AI tools can turbocharge fraud and automate discrimination, and we will not hesitate to use the full scope of our legal authorities to protect Americans from these threats,” said FTC Chair Lina Khan.

Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division added they “stand ready to hold accountable those entities that fail to address the discriminatory outcomes that too often result.”

ATM Explosive Attacks On Rise In Europe

There has been an increase in the number of explosive attacks on ATMs, according to the trade association European Association for Secure Transactions (EAST). 

While ATM related physical attacks were down six percent overall last year, ATM explosive attacks — including explosive gas and solid explosive attacks — were up 16 percent. 

Meanwhile, attacks due to ram raids and ATM burglary were up 8 percent. 

According to the group, losses accumulated due to ATM-related physical attacks were €11m. This is a 10 percent increase from the €10m reported during 2021.  

60 percent of these losses were due to explosive attacks.

New Report Says Half Of UK And US Consumers Have Experienced Fraud

A new report has found that more than half of consumers have experienced financial fraud, with romance scams topping the list as the most common.

In its latest report, financial risk ops platform Feedzai surveyed 4,000 consumers across the US and UK, finding that fraudsters are taking advantage of a “widening fraud knowledge gap” among consumers.

Alongside romance scams, money mule activity was also found to be prevalent, with over 40 percent of consumers saying they had been asked to receive funds on someone else’s behalf. 

Social media was found to be the single-largest source of scam attempts, followed by emails and phone calls.

More than half of respondents said that banks should refund customers who lose money to scams, and almost eight in 10 respondents said they would leave their bank if the bank did not refund them.

Apple Must End In-App Payment Restrictions, US Court Says 

A US Court of Appeals has ruled that Apple must allow developers to inform iPhone users about alternative payment methods when they make in-app purchases.

The opinion was made in a lawsuit by Epic Games against Apple, which claimed that Apple breached the law on three accounts: by restricting app distribution on iOS devices; by requiring in-app purchases to use its own in-app payment processor; and by limiting the ability of app developers to inform their customers of alternative payment options, also known as “anti-steering” provisions.

The appeals court has now confirmed the lower court’s decision, which largely sided with Apple, and ruled that only the anti-steering provisions were unlawful under California law.

The tech giant claimed victory, stating that the “decision reaffirms Apple’s resounding victory in this case, with nine of 10 claims having been decided in Apple’s favor”.

“We respectfully disagree with the court’s ruling on the one remaining claim under state law and are considering further review,” the firm added.

Tim Sweeney, CEO and founder of Epic Games, acknowledged that “Apple prevailed at the 9th Circuit Court” but called it “fortunate” that the court freed iOS developers from the anti-steering provisions.

“We're working on next steps,” Sweeney wrote.

Netherlands: Eight In Ten Still Carry Cash

New research from De Nederlansche Bank has revealed the majority of consumers in the country, a European leader in digital payments, still like to carry cash in their pockets. 

Some 79 percent of Dutch people carry banknotes and 81 percent carry coins. Meanwhile, more than two out of three Dutch people (68 percent) still expect to pay with cash in five years’ time.

Additionally, more than half of young people expect to as well. 

However, the DNB said that the share of cash payments is expected to decline. For example, 28 percent of Dutch people expect to pay less often with cash five years from now, and 31 expect not to at all. 

The main reasons cited were that electronic payments are becoming easier and the expectation that more and more retailers will refuse to accept cash.

India Signs Up To Join SPFS - Russia’s SWIFT Equivalent

Following a visit of Russia’s deputy prime minister to New Delhi, India has signed up to join the System for Transfer of Financial Message (SPFS), a SWIFT alternative operated by the Bank of Russia.

The agreement has not yet been made public, but was reported by the New Indian Express (NEI) following the departure of Denis Manturov, Russia’s deputy prime minister.

Manturov visited New Delhi during this year’s India-Russia Business Dialogue. During the public-facing part of Manturov’s visit, India’s minister of external affairs, Dr S Jaishankar, made a speech emphasising the need for further payment linkages using national currencies between the two countries.

“I completely agree that, today, payments, logistics, certifications — these really are the key areas,” said Jaishankar, “and I am convinced that it is possible to find solutions.”

Jaishankar said the payments issue would be “worked through” in the next day’s meeting between him and Manturov, after which followed the SPFS agreement, according to NEI.

Revolut Dealt Valuation Blow 

Revolut’s place as the UK’s largest fintech is in the air after a 46 percent writedown from asset management firm Schroders. 

The fintech unicorn has garnered support from high places in recent years, including from the Chancellor of the Exchequer. 

The firm said that its holding in Revolut is worth only £5.4m as of December, which is down from £10.1m a year earlier. This would suggest that the fintech total valuation was down $15bn to $18bn.

Worryingly for Revolut, this is the second cut to Revolut’s valuation by an investor in recent months, after US-based firm Triple Point estimated that its stake in the firm had reduced in value by 15 percent. 

This will not make pleasant reading for the firm, which has now been waiting more than two years for a verdict on its banking licence in the UK.

Binance Faces Probe In Brazil After Ignoring Regulator’s Order

Crypto giant Binance is reportedly under investigation in Brazil after the firm ignored the securities regulator’s order to stop selling cryptocurrency derivatives in the country.

Brazil’s securities regulator Comissão de Valores Mobiliários (CVM) first looked at Binance’s crypto derivatives offerings in 2020, which ultimately resulted in an order banning the exchange from offering crypto derivatives.

However, after the local news website Portal do Bitcoin reported that crypto traders can easily circumvent the trading ban by changing the language from Brazilian Portuguese to English or Portuguese from Portugal, the CVM re-opened the case.

Binance is understood to have submitted commitments to the agency, which may include a fine as well as an undertaking to change the way local investors access the products in Brazil.

Viva Wallet Partners With Elo On New All-In-One POS Solution

Viva Wallet, Europe’s first fully cloud-based neobank, has partnered with point of sale (POS) device maker Elo on a new Android-based mobile POS system.

The partnership will see Viva Wallet’s embedded payments platforms for smart devices, which can facilitate more than 30 different payment methods, integrated with Elo’s M50 Pay and M60 Pay mobile POS systems.

The device also facilitates ticketing, inventory management, delivery tracking, price checking, bar code scanning and other retail operations.

Viva Wallet and Elo have already launched the joint solution in Europe and plan to expand it globally, including in the US.

Portugal, Italy, Latvia In Firing Line Over Anti-Money Laundering Implementation

The European Commission has opened an infringement procedure by sending letters of formal notice to Italy, Latvia and Portugal regarding an incorrect transposition of the 5th Anti-Money Laundering Directive (5th AMLD). 

Although these member states have notified a complete transposition of the directive, the commission says that it has identified several instances of incorrect transposition. 

This includes fundamental aspects of the obligation to register, license or regulate services providers (Italy and Latvia); the obligation to establish a payment and bank accounts register (Latvia); and guaranteeing the financial intelligence unit proper access to anti-money laundering information (Portugal). 

“Legislative gaps occurring in one Member State have an impact on the EU as a whole,” the commission said in a statement. “That is why EU rules should be implemented and supervised efficiently to combat crime and protect our financial system.” 

The three countries now have two months to reply before the commission considers sending the cases on to the Court of Justice of the European Union. 

Zip Results Spook Investors As BNPL Retreats From More Jurisdictions

Zip, a multinational buy now, pay later (BNPL) firm based in Australia, has revealed that the growth of its active customer base has stalled.

In its Q1 earnings report, Zip ended the quarter with 7.2m active customers worldwide — 1 percent lower than a year ago and 3 percent lower than a quarter ago. The US, Zip’s largest market, saw the largest contraction, losing 8 percent of its customers since a year ago.

In the report, an “active customer” is defined as a customer who has transacted through Zip within the last 12 months.

In almost all jurisdictions, quarterly revenue and transaction volume was also down significantly, while yearly revenue and transaction volume was up.

The results follow Zip’s announcement last month that it will wind-down its Middle East business and divest from its businesses in South Africa and Central and Eastern Europe.

Chinese City To Pay Public Sector Staff In CBDC

The government of the Chinese city of Changshu has announced that, starting next month, it will start paying its staff using the digital yuan, China’s central bank digital currency (CBDC).

According to local media, those who will receive their salary in CBDC include teachers, medical staff, technicians, state enterprise employees and journalists for official media outlets.

Changshu is a city of about 1.5m people in Jiangsu province. Prior to paying salaries in CBDC, the city had already attempted to promote the use of the digital yuan by using it to pay overtime wages and to offer discounts on tax, transport, health and education costs.

As covered by VIXIO, going into 2023 the digital yuan’s use cases have expanded to include offline and securities payments. At the end of 2022, there was about $2bn in digital yuan in circulation.

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