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Banks in the U.S. and Canada reported a 10-fold jump in digital fraud this year, as criminals flock to tricks that trick customers into sending money, according to cybersecurity firm BioCatch.
Tom Peacock, director of global fraud intelligence at BioCatch, said the spike in reported fraud from the first three quarters of 2023 was due to banks tightening controls to prevent account takeovers and other forms of fraud. This is due to
“Scammers realized that humans are at their most vulnerable,” Peacock said. “It’s easier to get a human to do something through manipulation than to try to circumvent technological controls.”
BioCatch, a Tel Aviv-based company that uses behavioral data from mobile apps and websites to help banks distinguish between real users and criminals, culled information from 170 institutions in the U.S. and Canada. It provided its findings to CNBC ahead of its report. the company said american express, Barclays and HSBC Some of those 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. JP Morgan Chase, bank of america and wells fargo The Consumer Financial Protection Bureau said it could punish them for their roles in the massive Zelle payments network. Customers at the three banks reported a total of $166 million in fraudulent Zelle transactions in 2023.
The rise in social engineering scams, in which criminals use persuasion tactics to trick victims into sending money, began about five years ago, but “only really started to spread in the last 18 months,” Peacock said. he said.
Peacock said Zelle is a preferred method for criminals to withdraw funds because it is faster than other transfer options.
“When social engineering scams really started to take off in the U.S., it coincided with Zelle because the two went together,” he said. “Platforms like Zelle allow scammers to be faster and more successful.”
Early Warning Services, the owner of Zelle, said that while transaction values increased in 2023, fraud and scam reports decreased by almost 50%, with only a small portion of payment amounts being disputed as fraud. said.
Peacock added that the increase cited by BioCatch was also due to increased regulatory pressure that led banks to identify activities that they previously did not report as fraud. BioCatch declined to provide specific numbers for reported fraud, citing customer confidentiality.
In another sign of the cat-and-mouse nature of cybercrime, BioCatch clients report a 59% decrease in fraudulent account openings. Instead, criminals are focusing on taking over existing bank accounts, and fraud through that route has tripled, the company said.
