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APP (Authorised Push Payments) and taking control of bank accounts are 54% of the £1.26 billion fraud in 2021.
Given the sheer volume of scams being generated, 70% of people with mobile phones have receive a text message claiming to be, for example, from Royal Mail requesting a small payment for parcel delivery. These scams, as they expand, could make 2021 a bumper year for people being conned.
Available and inexpensive technology is enabling millions of scams to be sent by any wannabe fraudster. Fraudsters are moving their bank accounts to banks where Confirmation of Payee (CoP) is not checked – which is all but 9 banks. These combined activities saw a rise of 234% in two years 20 over 200,000 people being defrauded. At this rate, with more fraudsters, copycat websites, using multitude points of contact – text, phone, and email – by 2023 could exceed 1,000,000 victims.
Banks clearly believe the fraud is the responsibility of the Payor bank account owner as up to the arrival of Voluntary Reimbursement Code, (CRM Code) signed by 12 banks, 80% of the defrauded money was paid by their customers. The first half year of the Reimbursement Code the customers have had to pay 60% with some banks requiring their customers to pay 90%.
Banks are silo based when it comes to tackling fraud. Each has its own approach to protecting people and companies from financial crime. All have different approaches to, for example, fraud monitoring, AML (Anti Money Laundering) and KYC (Know your customer) solutions. Each utilizes its own data and gives limited view of the Payee customer and transactions to the Payor, even if the payor and payee are at the same bank.
It is this lack of collaboration from the banks coupled with the use of old technologies that facilitate the scams by the fraudsters. Fraudsters always go to the weakest link in account set up and fraud protection.
While fraud has always existed, the technology allows fraud to be conducted against anyone at any time and the holders of people’s money need to be better protected. Currently there is good news on using real time technology and the abandonment of older payment types:
The issue for the banks is how, they can collectively, tackle industrial scale on-line scamming which, though technology, is both pandemic and increasingly sophisticated.
Banks make resources available for any regulatory compliance issues
We welcome the digital era, but security must be on a par universally.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Hassan Zebdeh Financial Crime Advisor at Eastnets
08 October
Jelle Van Schaick Head of Marketing at Intergiro
07 October
Kuldeep Shrimali Consulting Partner at Tata Consultancy Services
Nikunj Gundaniya Product manager at Digipay.guru
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