The ability of scammers to convince people to transfer funds to them is rising, but financial institutions are lagging in their response.
While firms are prioritising resources to authorized transfer scams to mitigate client financial loss, just 50% of those who took part in a new study said they are confident in their ability to detect and stop the fraudulent activity.
The LexisNexis survey of fraud risk and mitigation strategy leaders at US financial services institutions highlights the highly manipulative and deceptive means that scammers use when targeting their victims, such as false sale of goods, services, and investments. Other methods include impersonating financial services employees, romantic interests, family, friends, businesses, and charities.
Almost two thirds of respondents reported challenges with the ability of their current solutions to mitigate authorized transfer scams.
"Scams, fraud and financial vulnerability are on the increase. Meanwhile, consumers increasingly expect safer and more secure interactions and transactions," said Soudamini Modak, director of fraud and identity at LexisNexis Risk Solutions. "FIs must analyze digital and behavioral signals to implement better strategies for mitigating scams across multiple channels. It's important FIs detect scams and other fraudulent behavior without frustrating consumers by slowing legitimate transactions and risking customers abandoning their transactions."
Thousands of Americans across the country were taken in by con artists running sophisticated investment scams last year, leading to more than a billion dollars in losses, according to a recent report by the Federal Bureau of Investigation.
While FIs have a clear role to play, they are also facing challenges from customers and clients, with 69% of respondents to the LexisNexis poll noting that it can be hard to convince people that they are being scammed.
Informing victims quickly is also a challenge with less than three in ten FIs informing customers within 24 hours where scams involve illegitimate orders for goods, services or investments, and just 4% notifying within this timeframe where scams involve impersonation of financial services employees.
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