Building Your Scams Playbook
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On a daily basis, NICE Actimize, an anti-fraud and anti-money laundering company and one of the sponsors of the 34th Annual ACFE Global Fraud Conference, monitors five billion transactions and protects more than $6 trillion. NICE Actimize Global Head Fraud Market Strategy and Prevention – SME, Rob Rendell, CFE, used these statistics to break down scam trends he and his company have been seeing in the conference session, “Scams Playbook: Detect, Deter, and Prevent, Sponsored by NICE Actimize.”
2022 was a big year for fraud, and Rendell believes this could be connected to the continued global adoption of real-time payments, also known as P2P. Globally, there was a $1.8 trillion loss from P2P fraud in 2022, and that number is expected to more than double to $5.2 trillion in 2028. In 2022, there was a large increase on both attempted frauds’ dollar amount year-over-year and the number of attempted fraud transactions year-over-year.
Scams also saw increases in 2022 thanks to real-time money movement. In fact, for the first time in history, scams outpaced account takeovers. As the adoption of P2P continues to increase, fraudsters are continually shifting their strategies, says Rendell. Fraudsters are now victimizing consumers by having consumers do the transactions on the fraudster’s behalf.
Rendell says you can’t have an account takeover without a money mule, which he says is the pathway or vehicle for the fraudsters to get rich. When 100 global fraud leaders were surveyed, Rendell says money mules were the top concern for this group, followed by unauthorized payments fraud.
Rendell says he is seeing a big shift coming to the fraud ecosystem, due to these three things:
Liability
Economic shift: Stresses in the economy are leading people to commit fraud to survive, when normally they wouldn’t.
New approaches: Fraud is more commonly being detected in real-time.
Due to this shift, Rendell says fraud examiners should also change their perspectives. He says “bringing in a lot more points of data to tell that story of whether or not [an] account is turning bad” before a fraudulent transaction is made. He says it’s “key and critical” for investigators to know the many facets of a fraud case.
Because there is an increase in mule activity using new accounts, Rendell says there is a need for early account monitoring. He says transaction monitoring doesn’t take identity risk into consideration, and monitoring an account early helps investigators pick up on fraud markers early.
Comprehensive Mule Detection:
Application and account opening – AI-enabled identity profiling models to detect stolen and synthetic identity fraud – stops mule activity at the front door.
Account monitoring – AI-powered behavioral analytics (patent pending) – leads to detection in early and mature accounts.
Network analytics – Advanced network analytics – uncovers related mule accounts and identify mule rings.
Meanwhile, when it comes to scams, Rendell says the delivery, scale, and real-time payment aspects of scams are different, but the intent remains the same from past years. He says the root of the scam also remains the same: the human element, the emotion and the story and the ploy. Since Rendell says different demographics are being hit by scams, scam detection for the masses needs to be deployed as opposed to just scam detection for one demographic group.
To create a playbook to control the scam issue, Rendell recommends breaking it down into four parts:
Prevention
Detection
Operational execution
Quantification, reporting and recoveries
When it comes to operational execution shifts, Rendell says more banks are deploying “stop the scam” teams and learning more about the victim’s motives, as opposed to the fraud standpoint. Rendell recommends phone calls be recorded for liability purposes should consumers be victimized. He also says financial institutions should slow consumer transactions down a little so they are not completely real-time. This would give consumers a little extra time to realize they may have fallen for a scam and they can inform their bank. Rendell says this has been an effective tool for fighting fraud in the U.K.
Rendell says quantification, reporting and recoveries are key areas for U.S. financial institutions that are “not on the hook now for liability with scams.” This helps financial institutions inform consumers to “understand what [their] exposure is in the event that a liability shift does come in.” Regulators also want to see how banks are helping consumers when it comes to scams and recovery, and they want it quantified.
Here is what Rendell considers a best practice fraud management framework:
Unified Fraud Prevention Platform
Data ecosystem: acquisition and integration
Detection analytics: AI and predictive analytics
Strategy management: business rules / decisions and reporting
Fraud operations: alert triage and case management
