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Banks in the United States and Canada have reported a tenfold surge in digital fraud this year, according to cybersecurity firms, as criminals adopt techniques to trick customers into sending them money. Biocapture.
Tom Peacock, director of global fraud intelligence at BioCatch, said there has been a sharp increase in reported fraud since the first three quarters of 2023 as banks put in place more controls to prevent account takeovers and other forms of fraud.
“Fraudsters have realized that humans are the weakest link,” Peacock said. “It’s easier to convince humans to do something through manipulation than to try to circumvent technological controls.”
BioCatch is a company based in Tel Aviv, Israel, that uses Behavioral Data from mobile apps and websites helps banks distinguish real users from criminals, the company provided CNBC’s findings ahead of a report that gathered information from 170 U.S. and Canadian institutions. the company stated American Express, Barclays Bank and HSBC is one of its customers.
As regulators and lawmakers focus on the harm caused by digital fraud, banks are under pressure to kick criminals off their platforms and compensate more victims. JPMorgan Chase, Bank of America and Wells Fargo The Consumer Financial Protection Bureau may penalize Zelle for its role in the giant Zelle payment network. Customers of the three banks reported fraud totaling $166 million in Zelle transactions in 2023.
Peacock said “social engineering scams” began about five years ago, in which criminals use persuasion tactics to convince victims to send them money, but have “really taken off” in the past 18 months or so.
Peacock said Zelle is the preferred way for criminals to withdraw funds because it is faster than other money transfer methods.
“When Social Engineering Scams Really Start to Come Out take off “In the U.S., it’s similar to Zelle in that the two are combined,” he said. “A platform like Zelle allows fraudsters to be faster and more successful.”
Zelle Owners Early Warning Service Says Scams and Fraud Reports Decline While Transaction Volume Increased in 2023 almost 50%, and only a small proportion of payment volume is disputed as fraud.
Peacock added that the growth cited by BioCatch is also due to greater identification of activity that banks had previously not flagged as fraud due to increasing regulatory pressure. BioCatch declined to provide the specific numbers of the reported scams, citing customer confidentiality.
BioCatch customers reported a 59% decrease in the number of fraudulent accounts opened, another sign of the cat-and-mouse dynamic of cybercrime. Instead, criminals focused on taking over existing bank accounts, resulting in a threefold increase in fraud through the channel, the company said.
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