PULSE Perspectives – November 2024

PULSE offers its perspective on news, analysis, and research in payments and banking. In this issue: Two person-to-person (P2P) wallet providers address scam fraud, the Federal Reserve assesses consumer digital payments, and an industry publication offers tips on stopping repeat payment fraud.
 

Clarifying Rules for P2P Payments

Digital Transactions reports an analysis from Consumer Reports found Apple Cash and Venmo have changed their user agreements in response to scam fraud. Both no longer consider payments induced by an imposter or by other fraud to be authorized. The analysis found that Cash App and Zelle have made no such policy changes. The issue of what constitutes an unauthorized P2P transaction gained visibility when consumers who had been defrauded sought reimbursement from P2P providers. However, because many consumers made these transactions willingly, they often were left with a financial loss.

PULSE Perspective: Scam fraud is particularly challenging to prevent because the consumer approves the transaction. PULSE encourages cardholder education, as well as collaboration and transparency among payments stakeholders to keep pace with the advances being made by fraudsters.

Fed Examines Consumer Use of Digital Payments

Payments Dive reports on research from the Kansas City Federal Reserve Bank, which analyzed digital payment services based on “access, use, safety, and affordability.” Researchers found that 46% of U.S. households have an online, nonbank payment account of some sort. In terms of affordability, the report determined that consumers identify electronic ACH and debit card payments as less expensive payment methods, and money orders, credit cards, prepaid cards, and checks as more expensive.

PULSE Perspective: It is a big plus for the future of debit that consumers perceive it as a low-cost payment method. It’s one of the reasons debit remains a top payment method among consumers.

Stopping Repeat Payment Fraud

Payments Journal reports on the importance of recognizing repeat offenders who exploit weaknesses in online payments. The article identifies three common methods for identifying a criminal: tracking IP addresses, using cookies and local storage to link a visitor to past activity, and looking for unusual user account patterns such as numerous failed login attempts. Additionally, device recognition – collecting browser and device attributes to create a unique fingerprint for each visitor – can help to identify repeat offenders even if they clear their cookies, use incognito mode, or change their IP address.

PULSE Perspective: These recommendations are solid, especially if paired with the use of DebitProtect^®, a standard service for PULSE institutions and processor participants who register.