December 6, 2019
Communicating Financial Services’ Never-Ending Fraud FightContact
The technology boom that has characterised the past few decades has seen increasingly disruptive technology enter our daily lives – a sophistication that is similarly reflected in the innovative and ever-changing tactics seen among financial criminals and fraudsters.
Financial institutions have continued to develop better defences against digital fraud, but this has driven fraudsters to evolve and adapt their tactics to sustain their criminal activities. Simply put, as financial services providers lock one door, criminal have inevitably found an unlocked window to break into.
Thousands of the reported fraud cases in the past year prove that fraud is an ever-evolving issue. The Dark Web for example has recently emerged as a playground for fraudsters where individuals’ personal information, including address and extended personal histories, and comprehensive financial information is all on offer for a price. This criminal marketplace has evolved whereby cyber-criminals create and sell tutorials that provide guides on how to carry out the latest frauds. These documents detail specific fraud capabilities that help facilitate financial crime through tactics such as account takeovers, phishing, cashing out, doxxing, synthetic fraud and account creation – all of which can be purchased for an average of £6 per tutorial.
UK Finance found that fraud losses on UK-issued cards increased by 19% between 2017 to 2018, with fraud losses totalling £671.4m last year, out of a total spending of £800bn on all cards.
But the same report found that UK banks and card companies stopped £1.12bn of fraudulent transactions, proving that financial providers are increasingly wary of the issue, with many investing heavily in advanced security systems to protect customers from becoming victims of fraud. HSBC alone employed an additional 4,000 employees to their fraud department earlier this year, working around the clock to detect any suspicious financial behaviours.
Despite these initiatives, new technologies and regulations will continue to present fraudsters with new opportunities to carry out fraud. While banks may provide enough information to customers on conventional fraud, more fraud attacks are being perpetrated by amateurs working remotely from their bedrooms who tailor their spending patterns to their victims making it more difficult for financial institutions to spot them.
Furthermore, for every new technology that is introduced to the market, it presents enterprising tech-savvy criminals with new opportunities – fraudsters are now hacking our smart TVs and voice assistants to steal from us.
Overall, the World Economic Forum’s 2018 Global Risk report estimates that cybercrime will cost businesses up to $8 trillion in the next five years, even as the financial services sector invests more heavily in fighting fraud.
The constantly adapting fraudster tactics means that established communications to protect data and spot fake emails are important, but potentially could quickly be out-of-date.
Criminals will continue to fine tune their tactics meaning financial institutions should be looking to not only adapt and evolve their back-office defences, but to also communicate the ever-changing landscape of fraud to its customers. Proactively arming the public with the most up-to-date information on the latest schemes and scams will only help in the never-ending battle with financial fraudsters.