by Robert Harris • 5 minutes • November 19, 2024
GASA Global State of Scams Report: $1T Lost to Scams
All expertise and insights are from human Feedzians, but we may leverage AI to enhance phrasing or efficiency. Welcome to the future.
Consumers lost US$1.03 trillion to scams in the past year, according to the latest findings from the 2024 Global State of Scams Report from the Global Anti-Scam Alliance (GASA). That’s trillion with a T—a figure that could represent a small nation’s entire GDP, a fleet of luxury yachts, or fund several nationwide infrastructure projects.
But instead of these practical investments, the vast sums lost to scams are lining criminals’ pockets, with only 4% of victims able to recover their money. GASA’s State of Scams Report (produced in collaboration with Feedzai) is based on insights from 58,239 respondents worldwide. The findings highlight the vital importance of investing in collaborative efforts and innovative solutions to address the rising scam threat.
Let’s break down the significance of the 2024 Global State of Scams Report’s findings.
24 Hours: The Lifetime of Almost Half of All Scams
GASA’s research finds nearly half of scams are concluded within 24 hours, from the first contact to the payment stage. This alarming statistic reflects the increasing use of pressure tactics by scammers, who rely on urgency to force quick decisions from their victims.
Fast-paced scams are particularly prevalent in one-off situations like SMS-based or online shopping scams, where scammers convince victims to pay immediately for fake goods or services. By pushing victims to act quickly, they capitalize on the real-time nature of payments, leaving little room for victims to second-guess or validate their actions.
However, not all scams happen quickly. Long-term scams, such as investment scams or romance scams, can last for months or even years. These more protracted scams rely on building trust and exploiting victims’ emotions over time. Scammers play the long game, manipulating their victims into believing they are either making a sound investment or developing a genuine romantic relationship. Over time, these scams often result in larger financial losses compared to faster scams.
Are Consumers Overconfident in Scam Detection Abilities?
Two-thirds (67%) of survey respondents claim they can recognize a scam when they see one. Yet, with a staggering $1.03 trillion in losses worldwide reported by GASA, it’s clear that scams continue to flourish.
This paradox raises an important question: if people are so confident in their ability to identify scams, why do they still fall for them?
Overconfidence might be the explanation. While banks and financial institutions have made significant strides in educating customers about the dangers of scams, this education can sometimes backfire, making individuals overly self-assured about their ability to avoid becoming victims. This overconfidence can lead to complacency, allowing scammers to slip through the cracks with more sophisticated tactics.
No one can catch all scams all the time, and ongoing education is essential to raise awareness without fostering a false sense of security. Consumers need to understand that scams are continually evolving, and even the savviest among us can fall victim to increasingly complex schemes. It is critical to maintain a healthy level of skepticism and remain vigilant, even if we think we are well-versed in scam detection.
Electronic Transfers and E-Wallets: Scammers’ Preferred Payment Tools
The global real-time payments market is projected to grow significantly in the coming years, with estimates suggesting it could reach US$575 billion by 2028. However, this convenience comes with risks. Real-time payment systems are particularly appealing to scammers because they allow for immediate fund transfers, often leaving victims with little recourse once the money is sent.
GASA’s findings show electronic transfers, bank transfers, and e-wallets have become the most common payment methods for scammers, at roughly 36% and 28%, respectively. This indicates that criminals are adept at exploiting real-time payment systems.
To secure real-time payments some countries like Australia have responded by implementing measures to slow down certain payments, particularly those related to cryptocurrency. However, while these protocols add an additional layer of protection, they also remove one of the main benefits of real-time payments—speed
Financial institutions must walk a fine line between providing the convenience of real-time payments and ensuring the safety of their customers. Implementing security measures that slow down payments, even marginally, can make a significant difference in preventing scams. However, any delay in payment delivery must be carefully balanced against consumer expectations for instant transactions.
Inbound Payments are Critical to Money Mules
A key challenge in combating scams is the rise of money muling, where individuals—often unknowingly—transfer stolen funds between accounts. Alarmingly, 7% of people globally admit they would participate in this illegal activity, highlighting a major risk in the fight against financial crime. Another 7% believe they could take criminals’ money and keep it—a decision that is likely to haunt them as criminals seek to get their money back.
Traditionally, fraud prevention has focused on stopping outbound payments. But this approach overlooks a crucial point: it’s the inbound payments flowing into mule accounts that ultimately lead to criminals.
Implementing inbound payment monitoring is essential for banks because they sit at the final stage of scam transactions. Monitoring inbound payments provides an opportunity to not only block fraudulent transfers but also to detect mule accounts in real-time, disrupting scam operations at their core.
This shift in strategy is essential for limiting the damage caused by scams and for weakening the infrastructure that allows fraudsters to move and hide illicit gains. The earlier such transactions are flagged, the better the chances of stopping scams before they escalate.
The Rise of GenAI
The increasing use of AI by scammers is another pressing challenge. Generative AI (GenAI) allows fraudsters to create convincing fake images, videos, and voices in seconds, making it harder than ever for victims to recognize scams.
One-third of respondents were uncertain if AI was used against them in a scam. However, the report also found about 37% of respondents were confident that AI was used to send them a scam text message.
As AI-powered scams increase, the volume of fraudulent payments will rise as well. This will require financial institutions to stay one step ahead by using the same technology to detect patterns and disrupt scams.
Efforts to reduce scam losses have begun to bear fruit in some countries, with banks adopting smarter controls and more accurate risk decisions based on data. Collaboration between financial institutions, tech companies, and regulators is essential to increasing data sharing and improving controls.
Calls for a Collaborative Approach to Fight Scams
Banks and payment providers have one significant advantage over criminals—an intimate understanding of their customers. Through AI, banks are starting to use this advantage to protect their customers and build lasting trust. However, banks cannot wage the fight against scams alone. This effort requires a coordinated, cross-industry effort involving financial institutions, tech companies, social media platforms, and telecommunications providers. Only by working together can we effectively disrupt criminal networks and protect consumers from falling victim to scams.
Feedzai is proud to work closely with our partner GASA to tackle these challenges, promote collaboration, and keep consumers safe from scams. As an industry partner to those at the sharp end globally, we are delighted to have this opportunity to share our experience and to reflect on the facts of scams. Scams are constantly evolving, which means so must our strategies for preventing, detecting, and responding to this pervasive threat.
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