Four prevalent banking scams to be alert for

Fraud Prevention04 Jun 2024

Rajiv Malhotra at Firstsource describes the four most prolific fraud trends used by unscrupulous scammers to target banking fraud

Front-line advisors have identified the four most prolific fraud trends used by unscrupulous scammers to target banking customers.

With fraud levels on the rise, financial crime experts at Firstsource, which partner with several of the UK’s biggest banks on anti-fraud activities, are advising how to stay one-step ahead of the scammers.

According to recent trends data, these four scams remain the most prevalent across the UK.

1. Impersonation scams

This type of scam is often referred to as authorised push payment (APP) or bank transfer fraud – this is because the victim knowingly transfers the funds as they have been tricked into believing they are making a genuine payment.

The widespread ‘WhatsApp scam’ is a good example of impersonation fraud. This is where a message is sent from a strange number supposedly from a relative of the recipient claiming that their phone is broken and requesting that they transfer them money.

Viviene, an experienced Firstsource call advisor, explains: “Unfortunately a lot of people fall for this scam. I had an elderly customer who said, ‘I’m making this payment because my son’s phone’s broken’ and I knew straight away that it was the WhatsApp scam.”

2. Investment fraud

Investment scams can often be more difficult to detect than other types of fraud. This is because the complicated nature of investments means it is not always obvious that fraud is taking place.

The emergence of cryptocurrency as a mainstream investment opportunity has caught the attention of fraudsters who have devised methods of conning consumers out of significant amounts of money.

A common crypto investment scam involves a consumer being persuaded to purchase a cryptocurrency through a legitimate intermediary and sending money to what they believe is a genuine investment platform, but which is in reality operated by scammers.

Stacey, who works on the ‘faster payments’ team at the Firstsource Anti-Fraud Centre of Excellence, explains: “It can take some time for investments to be realised so you might not know for six or seven months that you’ve been scammed.”

3. Topical and opportunistic fraud

Topical events that have been widely reported by the media are often hijacked by scammers.

For example, a number of fake websites offering ‘clearance sales’ were set up following the high-profile closure of UK retailer Wilko in 2023, which led to some consumers losing hundreds of pounds.

Jess, a Firstsource team leader who specialises in credit card fraud, says: “Fraud is always changing. When Wilko went into administration, there was a massive fraud trend where people thought they were buying things from Wilko’s closing down sale but it was fraud.

“Similar types of fraud are common when Black Friday comes around and also at Christmas time with scam text messages claiming to be from the Royal Mail asking for delivery payments.”

4. Building scams

Rogue traders and cowboy builders continue to account for a high proportion of fraud calls.

There are a number of warning signs to look out for in terms of building scams. These include:

The tradesperson refuses to provide a written quote
They ask for cash up front
They pressure the householder into an urgent decision
They don’t have a website or any online presence

Viviene says: “There have been quite a few times where we have done welfare calls for the customer because we’re really concerned about them. One of the advisors recently had an elderly customer where the fraudster was in the house with her. He was pretending to be a builder and was saying he needed a bank transfer to do some work.”

Rajiv Malhotra is Head of EMEA Business at Firstsource, a BPO provider

Main image courtesy of iStockPhoto.com and ronniechua

The issue with this, of course, is that parents evaluating childcare options will be unaware they are fabricated. Their decision could then be influenced by fake information, they could leave their children with unvetted sitters in unsafe settings, with potentially dangerous outcomes. Similarly for choosing healthcare providers, pet services, holiday accommodation… the list goes on and on.

Keeping consumers safe from online fraud

Thankfully, there are measures businesses can take to help protect consumers from a surge in online fraud:

Fight AI with AI. As fraudsters use increasingly sophisticated AI tools to run their scams, so too must businesses to protect their customers from them. Manually reviewing data for signs of fraud is impractical - fortunately AI fraud detection tools can help. AI is designed to tackle large amounts of data very efficiently to detect potential threats more easily.

Focus on behaviours, not output. However, AI fraud detection tools alone can’t do the job. The ability of generative AI tools to generate images, videos, content and music from text means authenticity is much harder to determine if focusing on content outputs alone. Take, for example, the German artist who won the 2023 Sony World Photography Award. He refused the award, revealing his submission was actually generated by AI.

Users’ behaviour provides useful insights. In the case of fake reviews, for example, it’s more helpful to consider where the review came from, when it was posted and who it benefits than analyse the review content alone.

Consider someone reviewing a physiotherapy clinic in Aberdeen and a coffee shop in Aberystwyth on the same day with an IP address geographically distant from both locations. This is highly suspicious and could be a sign of a fabricated review. This is not something that would not have been apparent solely from the review content.

Collaborate, innovate, educate. Key to tackling the growing challenge of online fraud is for AI researchers, fraud experts and law enforcement agencies to work together to share intelligence to identify emerging threats and trends.

Collaborative research projects can help understand specific fraud challenges, and bridge the gap between academia, industry and law enforcement. This helps inform the development of sophisticated fraud detection tools to enable all parties to keep one step ahead. Schemes, such as Call 159, are designed to educate consumers about what to do if they suspect they’ve been targeted by scams.

A future powered by generative AI

Generative AI tools promise greater advancements. No one can deny that AI tools currently perform impressively and they are only going to get better; it’s hard to predict where we’ll be in just 6 months’ time!

What is certain, however, is that bad actors will continue to exploit them in ways we’re not even aware of yet. AI researchers, enforcement agencies and fraud experts need to combine their expertise and resources to create a safer digital environment for individuals and businesses alike.

Fraud prevention tools spot the signals. While the quality of outputs from generative AI tools will likely improve, the behaviours of humans using them will be slower to change. Fraudsters will continue to unwittingly leave behind digital cues that fraud prevention tools can track to detect and stop them.

Balance fraud prevention with privacy protection. Striking the right balance between fraud prevention and privacy protection requires careful consideration of ethical principles and legal frameworks, alongside ongoing monitoring and evaluation of AI systems to ensure they align with societal values.

Preserve authenticity to reinforce trust. Authenticity matters when it comes to reviews. Without it they are worthless, and in the case of healthcare, childcare and pet services, potentially very dangerous.

As society and governments debate what guardrails or regulations are needed, businesses must focus on using proven solutions that combine AI and behavioural signals, to keep their platforms free from harmful influence and as safe as possible for their users.

Chris Downie is CEO of Pasabi

Main image courtesy of iStockPhoto.com