It’s the Most Fraudulent Time of the Year

Seeing an increase in financial crimes and fraud during the holidays is par for the course in this industry. But as with nearly everything we’ve experienced this year, we can expect a “new normal” in seasonal fraud and scams. The coronavirus isn’t the only thing hitting record numbers as it surges across the country and the world.

The Federal Trade Commission (FTC) reports that more than 200,000 complaints of scams and fraud have been filed this year and Americans have lost more than $190 million to fraud related to the coronavirus. The FTC’s Sentinel Network tracked about 206,000 reports of fraud, identity theft, spam telephone calls, and other potential COVID-related scams from January 1 through September 22.

Fraud is going even more viral on social media channels. According to the FTC’s latest Consumer Protection Data Spotlight, the number of complaints about scams that started on social media more than tripled in the last year. People reported losing more than $117 million to this type of scam in just the first six months of 2020, compared to $134 million for all of 2019. Online shopping topped the list of complaints from consumers who reported a scam to the FTC that originated on social media when they responded to an ad. Facebook and Instagram were the top two social media platforms identified in complaints by 94 percent of consumers. The surge in fraud is not just happening in the U.S. UK Finance reports over £27 million was lost to fraud at online marketplaces and auction websites in the first half of 2020.

While Black Friday has traditionally been the busiest shopping day of the year for big box stores and malls, people are playing it safe during the pandemic and doing their shopping online. A recent survey led by Pitney Bowes found that 57 percent of consumers plan to shop online more this year, with 45 percent reporting they already do more than half of their current shopping online – that’s nearly three times the number prepandemic. Online shoppers are projected to spend a record $13 billion this year.

The pandemic has impacted how consumers live, work, play, and shop – and their financial safety. As transactions and distractions increase during the holiday, consumers become prime targets for seasonal scams and holiday hoaxes. These can lead to account takeovers, fraudulent activity, and identity fraud. According to an Experian survey, more than half (57%) of consumers feel the risk of identity theft is greater this year due to the pandemic. reported that over 60 percent of banks say fraud volumes are rising, with over 40 percent reporting that average fraud hit value is going up and that 22 percent of Americans have been targeted by pandemic-related fraud attempts since April.

Cybercriminals know that consumers are shopping online more and paying less attention to their bank and credit card statements during the pandemic, especially during the holidays. They also know that higher transaction volumes and a demand for faster processing times leave merchants vulnerable to attacks. With the increase in real-time payments, account push payment (APP) attacks have risen dramatically.

Fraudsters take advantage of the spending frenzy to hide their illicit transactions. Con artists prey on consumers who are looking for that too-good-to-pass-up bargain. It’s not just online fraud and scams that become more prevalent this time of year. Other common holiday threats include phishing email scams, skimming devices at ATMs, retailer, and fuel stations, and gift card fraud. Counterfeit cases also rise as innovative new color printers that come out just before Christmas make it easier for creative crooks to create counterfeit checks or a passable IDs. Thieves will target ATMs under the assumption that banks keep more money in them for late night holiday shoppers.

During this most fraudulent time of the year, staff training and consumer education should be at the top of your holiday checklist. Train your frontline staff on how to detect fraudulent checks or fake IDs. Make sure they know the red flags that a consumer, particularly a senior customer, may be the victim of a scam. Have procedures and technology in place to identify unusual transaction activity on accounts. Increase robbery training and review opening and closing procedures. Be alert for mortgage and lending fraud that has substantially increased during the pandemic.

Give the Gift of Education
While you’re spreading holiday cheer on social media or your website, include the following tips to ensure your customers have a merry and bright holiday – and protect themselves from those nefarious cyber Grinches!

Think before you click: Never follow links in unsolicited emails. Check that any emails you receive are from a known or verified email address.

Authenticate and update: Use authentication methods offered by apps and websites, such as one-time passcodes sent via text or email or biometrics, particularly for banking and financial apps. Update passwords frequently and never reuse passwords.

Use trusted payment methods: New payment apps may be cool but they can also be bogus. Only use those you have verified are legitimate, such as PayPal or Zelle. If sending cash from your online or mobile banking app to a new recipient, do a small test transaction and confirm they got it.

Don’t send anything via wire transfer or prepaid cards to someone you don’t know. Use a credit card, single-use debit card, or prepaid reloadable card for online purchases.

When in doubt, hang up. Never provide credit card info as part of an unsolicited phone call. If it sounds too good to be true, it probably is.

‘Tis the season for safe giving. To protect yourself from charity fraud, make sure the donation website is legitimate or an online request to support a person or family is someone you know or can be verified. Monitor your accounts. Frequently check your financial accounts for any activity you do not recognize.

Monitor your credit report: Not just during the holidays. Periodically monitor your credit report for strange or unexpected activity for potential signs of identity theft.

The most wonderful time of the year is also the most vulnerable time of year for consumers struggling to make ends meet during a pandemic.

Written for and originally appeared in Bankers’ Hotline Vol. 30, No. 11, 11/30/20

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