How to stop fraudsters from exploiting coronavirus
Coronavirus, or more accurately, COVID-19, has now been classed as a pandemic, with cases confirmed in over 140 countries and regions.
The tragic coronavirus outbreak has claimed over 6000 lives, devastated families, and spreads illness as it travels the world. Fear and disruption journey with Covid-19 as it shakes the stock market, forces countries into lockdown, and possibly plunges China into economic contraction, something not seen in almost half a century.
As if the situation wasn’t stressful enough, financial institutions must contend with fraudsters who see this worldwide misfortune as a prime opportunity to commit financial crimes.
There are two main avenues for fraudsters to exploit the coronavirus crisis: capitalizing on increased digital transactions and taking advantage of consumers’ fears through phishing schemes.
Fraudsters capitalize on the increase in digital transactions
To help contain the coronavirus outbreak, up to 30% of Hong Kong banks temporarily closed their branches, resulting in a surge in online activity. For example, the Bank of China (Hong Kong) saw “a significant increase” in customers accessing its mobile applications.
An increase in online transactions can make banks more susceptible to increased fraud attacks. In the U.S., total in-person fraud decreased $3.68 billion in 2015, to $2.91 billion in 2016, while total remote card fraud increased from $3.40 billion in 2015 to $4.57 billion in 2016, according to the U.S. Federal Reserve.
As people grow cautious of physical contact and spreading the virus, we are also starting to see a decrease in consumers willing to handle physical cash. This leads to retailers and customers relying on alternative digital payment options including e-wallets and card payment. For example, Bank of East Asia reported double-digit increases in faster-payment transactions.
Applying social distancing to payments makes sense from a public health perspective, but it does leave clients and banks exposed to new vulnerabilities. With open banking and faster payments, banks need fraud management strategies that are agile enough to stay one step ahead of the fraudsters.
Faster and real-time payments have a higher fraud percentage due to funds being immediately available in fraudsters’ accounts. Fraudsters love instant transfers because the victim doesn’t notice the suspicious movements until it’s too late.
Fraudsters exploit consumers’ fears with phishing scams
Fear, misinformation, and confusion make customers susceptible to fraud via phishing scams. A phishing scammer sends fraudulent emails or phone calls to extract account credentials from unsuspecting victims. In these emails or calls, fraudsters pretend to be a legitimate source by using an official company’s logo, phrasing, and tone of voice.
Fraudsters succeed at phishing scams when victims access a seemingly legitimate link, which in reality is a cloned version of the official company’s link. As an illustration, the victim will see http://signin.ebay.com/ but the href code links to a different address. As a result, high amounts of transactions are made in a short time.
The World Health Organization (WHO) released an advisory urging people to be on the lookout for phishing scams related to coronavirus. Scammers highlight the language of emergencies to make victims act quickly. The WHO has urged people to resist giving in to panic and to think twice about whether an email looks legitimate. If the information is supposedly public, there’s no reason to submit login credentials in order to see it.
How banks can fight back
With the rise in digital activity, it is crucial that banks adopt a technology-driven approach that allows them to automatically monitor client activity and transactions in real-time and take action to prevent financial criminals. As digital banking volumes increase, technology such as machine learning provides the only scalable way to respond to threats and keep ahead of the evolving fraud landscape.
As ever, a comprehensive anti-phishing strategy should include multiple layers. Banks can use tools like rules, machine learning models, and digital behavioural analytics to look for anomalies in payments such as new beneficiaries, the number of different currencies being transacted in, and previously dormant accounts becoming active.
Coronavirus creates uncertainty for countries, communities, and businesses — both big and small. The truth is we don’t know what will happen next. But we know the last thing we need is for vile opportunists to use this global hardship to swindle, victimize, and fatten their pockets. So, for now, let’s keep calm, and carry on fighting fraud.
Figures quoted were taken from public sources and accurate at the time of publishing. As the situation continues to unfold, these numbers are subject to change.
Latest posts by Neel Shingadia - Regional Director, APAC (see all)
- Hong Kong Banks Need To Look Beyond TM-E-1 - September 9, 2020
- How to stop fraudsters from exploiting coronavirus - March 16, 2020
Subscribe to stay infomed
- phishing scams