Asking people in different corners of banking about the most important trends in fraud is like discussing an elephant with the eight blind men in the famous parable. They concentrate on the most immediate threats, but none has the full picture.
Put the conversations together, though, and what emerges is a picture of a resurgence in old-school fraud: phone scams, fast ones pulled on card-processing merchants and simple deceptions of online customers.
Pindrop Security, for instance, released a study Wednesday that shows a 30% rise in phone fraud among financial institutions since 2013. The company, which provides call-center-security software, analyzed calling patterns at financial institutions, credit card issuers and online retailers.
With today’s financial institutions ever-watchful about potential electronic security events across banking channels, fraudsters are becoming more creative in the ways they try to get sensitive information from people, including FI call center employees. Part of the reason for this shift is FIs’ desires to provide an easy, pleasurable customer experience, which can create unintended circumstances.
With FIs’ focus on customer satisfaction and ease of use, and not necessarily fraud detection (although that is important as well), there can be opportunities for fraudsters to game the system. One way that banks and credit unions can thwart nefarious actions is to increase their use of multifactor authentication, including harder challenge questions, including information about current account events that only customers would know. Questions about recent deposits or withdrawals or cleared checks for example, would make it more difficult for fraudsters to compromise accounts. Such techniques can offer enhanced security, without creating a negative customer experience.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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