10th April 2024

In fraud prevention the customer is the weakest link

By Grant White

Fraud is on the rise, fraudsters are getting more sophisticated and in many cases customers are voluntarily handing their money over. We cover these findings and more in a recent report created by the Contact Centre Management Association (CCMA)

The following is based on an excerpt and findings from the CCMA’s report, Balancing Fighting Fraud with Customer Experience.  You can read the full report here.

According to the CCMA’s 2023 consumer survey, 36% of people reported experiencing an unauthorised attempt to access one or more of their accounts—an incremental increase from the 33% reported in their March 2022 survey. Moreover, customers are frequently manipulated or coerced by fraudsters into transferring money themselves.

In addition, UK Finance highlights that ‘authorised push payments’—instances where victims are tricked into sending money to fraudsters—accounted for 40% of all fraud losses in 2022. This type of first-party fraud, also termed ‘coercion’, is expected to escalate as self-serve customer journeys become more commonplace. 

Fraudsters adeptly employ emotive and behavioural strategies, exerting pressure on victims to make prompt decisions or take immediate action. In the report Ben Lyons, Vice President, Banking Operations, Chase UK explains,  “ Today, there are instances of fraudsters working with behavioural scientists. They’re getting very clever at being able to pull on heartstrings.” 

And Craig McKeever, Fraud Analyst, Optimus Cards UK echoes this:“ Fraudsters will impersonate the fraud team and make customers panic. ‘You’re about to lose all your money. We need to move your money to a secure account.’ If customers say ‘why would my bank ever need me to move the money myself?’ they will say ‘you haven’t got time and every second counts”  

The growing sophistication of this type of crime means even savvy customers are at risk. Fraudsters are increasingly adept at obtaining customer details and impersonating legitimate brand representatives. 

Unpicking what has happened can be very tricky and needs to be handled carefully. Jon Bowen, Director of Operations, Paymentshield & Lloyd Latchford also shares his experience for the report:

“ If the fraudster has convinced them it is a genuine activity, [as a provider] navigating through that is really difficult. When asked ‘do you know what you’re doing?’ and ‘was it you?’, the customer answered yes. It’s a real test when you’re presented with the real customer and they are convinced they are doing the right thing.” 

Surprisingly, some types of fraud are committed not by strangers but by friends or family. “We see customers where family members will use their [insurance] policy to claim and they’re not even aware of it. They share passwords and login details, sometimes knowing that they will be used for fraud, and sometimes due to naivetë” says Nick Edge, Head of Fraud Technology, Likewize. 

Younger people especially vulnerable to online scams 

Conventional wisdom might imply that older individuals are more susceptible to fraud and social engineering. However, this is offset by the rise of various forms of digital fraud to which younger people are particularly vulnerable. According to UK Finance data, there was a 33% surge in fraud losses linked to mobile phones in 2022 compared to 2021. 

As technology advances, making it simpler to impersonate someone’s image or voice, new methods of committing fraud also emerge.

“As fraud methods become more sophisticated and more digital, you almost start to lock out some of the older generation.” – says Bowen. 

Alongside being more susceptible to digital fraud, younger individuals are also more inclined to report experiencing an unauthorised attempt to access their accounts. A substantial 52% of people aged 18-34 admit to encountering such unauthorised access attempts, compared to 22% of those aged over 55. 

Staying ahead of fraudsters 

The CCMA report found that key to detecting fraud attempts is the ability to spot unusual patterns. This is accomplished both by humans on the front line who are trained to pick up cues, as well as automated analytics applied to behavioural data. As coercion becomes increasingly common, security systems must not only guard against bad actors impersonating customers, but also help genuine customers protect themselves from scams. 

“It puts more of an onus on behavioural monitoring, transaction monitoring. Your focus is
on identifying things that are out of the ordinary, for example someone who previously has not been flagged but is starting to behave in a way that’s not in line with their history.” – Sean Gilholme, Head of Customer Service, Atom Bank 

Whether building and implementing analytics or rolling out training for the front line, operationalising and scaling security can be a complex task for organisations that serve multiple jurisdictions and/ or with heterogeneous product lines and customer segments. 

What works for one group and in one market may not work for another. 

To learn more read the full CCMA report.