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Welcome back to another iGaming Daily episode where in part 1 the payment expert team will be analysing the newly introduced APP fraud regulations and what this means for both company and customer and in part 2, SBC Americas editor Jessica Wellman and SBC VP of Latin America relationships Lucy Mourinho will be recapping their experience so far at the G2E event in Las Vegas. But first, a word from our sponsor OptiMove, the number one CRM marketing solution for the iGaming market. As a special offer, OptiMove is offering new clients a free first month when they buy OptiMove. For more information and claim the free month, go to OptiMove.com forward slash SBC. Links will be also left in the podcast episode description below. So I'm Colin Williams, joined by my payment expert colleague, Kieran O'Connor, and we're gonna be... Taking a little look at the new authorized push payment fraud rules that were introduced last Monday Kieran, I'm not sure if you've been a victim of APP fraud I had a little problem in Budapest this year Right, what was that about then? ATM took too much, I only asked for £20 and looked at me online banking the same night and it was about 200 and something odd Oh my god Which just didn't seem right but I got that one cleared, have you not had any other... Any fraud issues in recent years? No fraud issues, some attempts I think. Like we're gonna talk about it in this episode. Some people trying to say that they're someone they're not and get money off me. Usually get the one like, hi, it's mum. I'm stuck, can I have some money? Yeah, yeah, you see all types of them, don't you? But yeah, so first Kieran, can you just give us the listeners an overview of what APP fraud is and why it's becoming one of the most prevalent fraud methods in the UK today? Yeah, so we've covered it a lot over on Payment Expert the last couple of weeks and it's definitely a hot topic in the payments industry. So first of all, as you mentioned, APP fraud stands for All Fries Push Payment Fraud, which pretty much consists of individuals being deceived into transferring funds to fraudsters who are pretending to be people that they know usually, or also just other companies that they might deal with. A pretty shocking statistic that has been making the rounds. the past couple of months is that UK consumers were defrauded out of 460 million in 2023, which is quite a bit. And sort of what's been going on is the emergence of AI hasn't helped us. You've got deep fakes, which we'll talk about later on in the episode, and also social media, which is quite unregulated really. This seems to be the foundation of where most of this fraud takes place. Obviously the well established ones like Facebook, Twitter, X, I should call it now I guess. Telegram is seemingly becoming like a hotbed for fraud and all types of various other stuff so it's definitely becoming the most prevalent fraud method that I can remember in quite some time. So the payments systems regulator, they introduced these last Monday, 7th October, the new rules on APP fraud. Basically, essentially, UK payment firms are now obligated to reimburse victims of APP fraud with compensation capped at £85,000 with the PSR covering 99% of all claimed amount. If the claim exceeds the £85,000 cap and are not reimbursed, companies can raise their case with the financial ombudsman service which has a compensation limit of £430,000 and they'll look at each case individually and then It's a free of service charge so companies can go through this process if yeah, like 85,000 cap is exceeded There is quite some history with these new rules as well I know the payments industry has pushed back quite a bit. I mean the 85,000 pound cap Was originally it was four hundred and fifteen thousand. And so you so the backlash caring has obviously been it's been They've done the job really, haven't they, the payments industry of kind of letting their voice be heard and getting it back down to £85,000, right? Yeah, there's been a lot of backlash about these rules which went into play. I mean, the first one was that when they first brought in it was £415,000 max reimbursement and that would be shared 50-50 between the sending and the receiving firm. So, I'm not going to mask, but let's say it's like £200,000 each maximum. Now, most fraud... that's committed in this APP fraud, I believe, doesn't really get over 85,000, which is the cap now. So the big argument that they had was, why are we sort of putting this massive limit on when usually the fraud cases aren't gonna get to that if anything we're just sort of encouraging maybe fraudsters themselves to fake that they're being frauded or people to take advantage of this system. Yeah, like you said, I mean. It's very rare that you have someone who's pretending to be somebody asking for 100 grand, like your mortgage isn't been paid you 100 grand. Like I think a lot more customers and consumers are becoming a lot more privy and a lot more protected also when it comes to these type of cases. Calls have also been made to delay Monday's launch, which the payments industry didn't get their own way this time. It's now integrated. into regulation and now firms must follow these rules. I am sure that the payment systems regulator has called on for any industry collaboration on some of the rules moving forward. But coming back to some of the good and the bad care and what more reaction have you heard from some of these payment companies that we've been speaking to and did the... Is it good, is it bad or is it a mix of a mixed bag ruler? Yeah, it's definitely a mix of opinions I'd say. We've got a lot of payment firms sort of taking the route of let's get on with it. The rules are in now. We fought back before they were in place. We tried to get them delayed till next year, but the PSR aren't moving anywhere and they're here, so we've got to deal with it. On the flip side of that, there are some people who are still fighting the fight against them. big issues which they've raised and what the argument has now turned into is how social media platforms have sort of avoided any regulation because as we said if someone looks to reimburse from fraud it'll be the receiving and the sending PSP which will have to reimburse 50-50. The social media platform which the fraud may have originated from have absolutely no financial responsibility. So a lot of payment firms aren't happy with that. But on the flip side of that, social media platforms have noticed that these arguments are coming about and thought, well, we better do something. So earlier this week, Meta announced that it had expanded an information sharing partnership with two leading UK retail banks, which are NatWest Group and Metro Bank. And these have been working with Meta on information sharing, looking... to prevent fraud and work on. I think it's Metas initiative which they've launched pretty much off the backlash of all these payments companies. This initiative, while looking good, isn't really being welcomed by a lot of PSPs who still say that there should be more done. Woody Maloof, I think he pronounced his name right, who's head of financial account These plans are baby steps, when what the industry really needs is giant leaps forward. Victims and financial institutions still ultimately bear the cost. These platforms share no responsibility in reimbursing victims, and so they have no incentive to do anything about it. A commitment to data sharing, albeit needed, simply isn't good enough. Yeah, that's quite a bold statement really there because I think you look at social media platforms, I mean Meta for instance is one of the big tech companies, one of the biggest companies in the world and they've constantly fought and went back and forth with regulators in terms of data sharing and obviously, Zooka, Matt Zooka was in court a few years ago when he regarded stuff like this but when it pertains to payments as well, I think you're seeing a lot of fraud within some of these social media affiliated shops like your TikTok shop or your Instagram shop where it's not really it's not really app fraud it's more or less scams and you know fake goods fake services stuff like that where you know they're kind of targeting young adults aren't they, even children at some point so yeah I think the more oversight with these social media platforms could be introduced. Do I think it'll happen? Not really, no. Because this is, I think, they will need a completely revamped and new framework for social media oversight to pertain to payments as well. And then it's all about linking that framework with the payments framework. And yeah, it will just take a long time for that to integrate if it does. But Kieran, I'll probably give my opinion on this first and then I'll leave the rest up to you. So. I believe, so if this will reduce or potentially increase or reduce app fraud, these new rules I think the new rules of course will benefit the customer because you're being reimbursed within 5 days of making a successful claim also the new rules will also be covered 99% by the regulator so it gives the customer peace of mind knowing they'll be reimbursed For companies, obviously like we mentioned, I can see frustration with the new rules as these may actually see an uptick in fraud cases, especially if the fraudsters catch wind of you know, the 85k cap, right? I mean, you're gonna start seeing a lot more fraudsters maybe taking advantage of this More manual processing as well for the companies' fraud It takes a lot of time for these companies to manually process this and then when you take into account integrating some new digital services, anti-fraud solutions, they can also take time to integrate as well. So yeah, Kieran, I know we're touching on technology as well. I know AI is causing a huge problem in this regard as well, right? Yeah, so obviously AI, you can't get away from it, it seems. We was at the Payment Experts Summit the whole week in Lisbon. There was a lot of talks about AI there. And we went to Money2020, me and yourself, Callum, there was a lot of talks about AI. can't seem to get rid of it at the minute, it's the hot topic. But AI, the funny thing about AI in this case is that it's being used on both sides to prevent and combat fraud as well as sort of commit fraud. But as always, the bad actors are always a stepping-front when it comes to any technology. As people who are fighting fraud need to see what they're doing. First of all, fraud has to be committed in a certain way for you then to think, right, how do we prevent this from happening again? So they're always one step ahead. The sort of ways we're seeing AI being used more and more is from its deep fake capabilities. Now, this isn't just videos of Donald Trump making strange announcements or things. It's also people using voices, which they can gather. If they can gather your dad's or mom's voice from some sort of phone call, they could then play a clip or turn it into a little voice message of their own with that voice. so it's really, really sophisticated. Sort of on that, do I think that these rules will increase or decrease APP fraud? I think education has a real part to play in all this, and I know a lot of people we spoke to, that's always one of their messages that the payment system and the social media side have to educate people on APP fraud and what to look out for. But. I don't think there will be a dramatic reduction in fraud rates just from these rules. One advantage I would say for the consumer is that no PSPs are being obligated to reimburse the victims. The money, they will always receive the money that's lost to a certain extent. But as you can imagine the frustration from PSPs is because they're not their customers. Which is, quite rightly, it's quite scurried for them. I know there was a lot of talks about when it was above 400 phones in the match cap, that a lot of companies were worried that this could bankrupt them really. If you get a series of massive fraud reimbursement rates, they could face bankruptcy. So I don't think it'll have a major effect on APP fraud, but it will improve the life of victims who get caught out by these bad actors. Yeah, especially when you're talking about the smaller payment companies as well Obviously coming from the back of Covid as well, those effects are still lingering So the new APP fraud rules are still in their infancy They've only been implemented this week So if you want to hear more about the progression of APP fraud and what is being done to prevent it Then stay tuned on Payment Expert, I'm sure we've got some great commentary on that But that is the end for part one for now, but stay tuned because Jessica Wellman and Lucia Mourinho will be calling in from Las Vegas to talk about their experience at G2E. Hey everyone, welcome back to iGaming Daily. I am Jessica Wellman, editor of SBC Americas. I'm joined by Lucia Mourinho, VP Relationships Latam, and we are living it up in Las Vegas. When I say living it up, I mean we are kind of exhausted because last night was a party. You want to take the rain's loo and what happened last night? Well, first of all, like, I think this is becoming a thing of us recording something at G2E. I know, I like this. I love this. You know what? This is an outbreak, because we actually have a setup right now. And we usually are, like, in a random corner recording. And right now, yeah, it's great. But about the party. Yeah, so we moved from Beer Park to the Marquis and the Cosmo, right? Yeah. And as everyone knows, it's an iconic venue. We had the cabanas and we had a pool and apparently someone jumped on the pool. Yeah, I saw that pool and knew that was going to happen. Um, it's hot here. It's like a hundred degrees. So yeah, and it's very dry, very dry. So yeah, at the beginning of the night when people were in India and we were talking about that, we said like, who's going to be that person? It happened, but I missed it. There's always next time, I guess. Yeah, there's next time. And there's SPC Americas, which was kind of the whole point of the party was to really hit home that we are going so big in May in Fort Lauderdale with a co-hosted, co-located event of the Latam Conference and our North America Conference that used to be in the Meadowlands. People excited for it? Yeah, they're very excited about it. We know that there's interest around both regions, so it doesn't have to be exclusively about one being interested in the other one. It's just about being in one place where you can see everything that's going on in both. And yeah, like you said, it's going to be much bigger. We're going to expect 10,000 people at the Broward County Convention Center, set it right. So we're moving from New Jersey to Fort Lauderdale, and then we're moving from the Hub Rock to the Convention Center. And yeah, we're going to be focusing a little bit more on the land-based industry. which is obviously huge both in the US and in Latam. So that's exciting. Yeah, it's super exciting. I will be honest, I have not had too much time to look forward because this is a hectic time for me and I've been very busy running around. Like in fact, this is probably the first time I've seen you for more than 10 minutes the entire time. I know you haven't gotten to see much conference content, but I've been going to content and talking to people and the word of the conference is sweeps. Everybody getting into the sweep space, people very upset that the sweep space is growing. It's the new DFS+. Everybody has very strong opinions and very contentious thoughts on them. Daniel Wallach, the gaming attorney, put a thread on Twitter yesterday that was... Interesting I have some quibbles with his argument, but again, I'm not a lawyer He is there was a sweeps panel that I love a don't you love when a panel like fights? I love it. Like if there's drama, I want to be there for it Oh, you miss drama like there were two kind of pro sweeps and two well three kind of anti sweeps and Just really contentious arguing about I mean, I think it's It would take 45 minutes for me to kind of get into the weeds of the legal argument, but there's just a lot of legal minutiae on this one. And I think the point that I found the most resonant was my friend Matt Coffin, who works for Eilers and CryCheck, was on the panel. And he's like, listen, we missed the boat on DFS. We tried to crack down on it. We didn't get involved in it. And now look at what our landscape looks like. It's one thing if these two companies rule sports betting, these two companies are also the number one and two in online casino. And it's weird that we have traditional casino companies that I think really understand casino and they're not dominating. So he's just like, I think I hope that we don't make the same mistake again. Like there's room for maybe some of these companies to think about going in to sweeps. And maybe that's the answer versus trying so hard to shut it down. Have you had a chance to talk, like, shop with anyone, or you've just been working on the party all day? Yeah, working at the party, but talking about Swipstakes, can you remember which company it was, but here at the Venetian, there's a huge sign that says, like, do you want to get into Swipstakes? Have you seen it? I haven't. Yeah, no, it's crazy. Like, it's one of the biggest ones that I've seen. It's, like, somewhere around the expo. And I think that proves that the interest is there for some of them. So yeah, I'm shocked too because you know G2E is an AGA Supported event and the AGA They had a policy paper or like a policy stance come out on sweeps that it was somewhat negative I think it's tricky for them because a lot of these big game suppliers supply social games And they have interest on both sides of things in a way that some of the operators don't but I think we will continue to monitor it continue to see what happens and but yeah if it's any indication it's quickly growing at a time where everything else I heard was not only are we probably not getting anything passed in 2025, it's probably a long shot to even get anything passed in 2026. So yeah, it's not the best news. So that's a bit of a downer, but we'll leave on an up note that we're excited for America as we had a great party. You got LATAM in a couple weeks, so I'm gonna let you go and rest because you're gonna need every minute of it before you get on a plane again. Alright, thanks for tuning in, guys.