Recently, in Kansas, two men were arrested after stealing thousands of dollars from victims’ debit cards. Pretending to be fraud investigators from the bank, the men convinced victims to give them their debit card numbers, and then, they purchased $2,000 in Target gift cards.
In Pennsylvania, another crime ring blew these numbers out of the water when they stole nearly $2 million from bank customers. However, they used the same tactic. They pretended to be bank employees to trick customers into giving up sensitive account information, and they even masked their phone numbers so that it looked like the calls were coming from the bank.
These incidents serve as a reminder that banks need to be diligent against these types of scams. Unfortunately, however, regardless of how much you spend on bank fraud software or employee training, your financial institution is still vulnerable to these phishing scams.
The weak link is your customers. To protect yourself, you have to educate them about the risk. Check out these tips.
1. Tell your customers about your fraud communication processes.
This type of scam leverages your customers’ fears about bank fraud to get them to reveal sensitive information about their bank accounts or debit card numbers. To reduce the risk, let your customers know what to expect if fraud occurs on their accounts.
Tell them how the bank will contact them. Do you send texts to verify transactions that appear to be fraudulent? Do you call them? What type of information do you request to verify their identity? What details will you never request? This is the type of information you need to get to your customers.
Then, let your customers know what to do if they suspect an issue with the call. Tell them that if they are uncomfortable, they should hang up and call the bank directly at the number that they have. Your customers should understand that it’s better to accidentally hang up on a bank employee than it is to give a scammer your PIN or account password.
2. Be proactive.
Ideally, you should start talking about your fraud prevention and resolution processes as soon as a new customer opens a bank account. The personal banker handling the account opening should welcome your new customer and advise them that your institution does as much as possible to reduce the risk of fraud.
Then, they should tell the customer how your bank will contact them if fraud is suspected on their account. They should also outline the types of details that your bank will never request over the phone such as card PINs. Finally, they should tell the new customer a little bit about scams where people pose as fraud resolution specialists, and they should give them tips on how to avoid this particular scam.
3. Educate and re-educate consistently.
Fraud education efforts are not a one-time thing. Stay in contact with your customers. Keep them up to date on current risks and best practices for protecting their account. Consider using a combination of methods such as emails, in-branch signage, and educational alerts with paper statements. You may even want to hold webinars or do live videos on your social channels.
Embed fraud education into your online banking app and tools. Focus on the places where fraud often occurs. For example, if you offer peer-to-peer transfers, put up fraud warning in the system. Before letting your customers hit “send”, have them confirm that they know to whom they’re sending the money and they understand that they cannot get a refund.
4. Engage and tell a story.
Most people are not going to take the time to read a text-heavy educational resource. If you want your customers to understand the risks, you need to be creative about your efforts. Have your marketing team or other creatives on staff develop educational materials that will grip your customers’ interest.
Focus on telling stories. People are more likely to pay attention to stories than facts and theories. They develop a stronger understanding of the risks when it’s presented in a story format. This could be anything from a short video to a cartoon strip to a written-out cautionary tale.
5. Invest in fraud detection software that looks for patterns.
Unfortunately, even the most educated customer can occasionally fall for a well-orchestrated scam. If one of your customers gives up details that allow a thief to access their account or payment methods, you need software that can detect the fraud.
Legacy fraud prevention solutions generally don’t pick up small scams like the one perpetrated in Kansas, and they can also miss big scams like the one in Pennsylvania. These solutions rely on preset parameters that are typically based on the value of the transaction, and thus, they miss things like a scam artist making low-cost purchases. To detect fraud, you need a dynamic solution that goes beyond just the numbers and instead analyzes behavior on the account.
Effective bank fraud software gets to know your customers’ usual behavior. If something happens that’s outside your customers’ usual scope of behavior, the software identifies the transaction as a potential risk. With new customers, the software analyzes the transactions based on the usual patterns of legitimate and fraudulent transactions.
Then, the software assigns a risk value to the transaction, and it alerts your team for a manual review or seeks confirmation of validity from your customer. Modern bank fraud software also looks at multiple data points to assess fraud risk. This increases the efficacy of the fraud software, allowing it to spot fraud cases that it wouldn’t be able to if it had a more narrow focus.
Contact SQN Banking Systems Today
SQN Banking Systems offers robust services and solutions to help your financial institution reduce its risk of fraud. Whenever possible, our solutions focus on prevention over detection. We firmly believe that eliminating fraud is more cost-effective than dealing with fraud after it has already occurred.
However, we also know that there is no one-size-fits-all solution for financial institutions. You need to approach fraud in a way that is tailored to your unique risk profile, operating strategy, and budget. We can help you develop the best methods for your situation. To learn more or to set up a review of your fraud processes, contact us today.