Resource Center

Which schemes, scams and trends are financial fraud investigators seeing most often in 2018? We joined the International Association of Financial Crimes Investigators (IAFCI) Minnesota/Dakotas Chapter at their annual conference to learn more about the most compelling topics in fraud-fighting today.

The IAFCI Fall Conference is attended by multiple fraud investigators from the private sector, in addition to white-collar crime investigators from law enforcement. The conference focused on insights from industry leaders in financial services, including Ameriprise, Allianz, U.S. Bank and more. Key discussion topics included:

Fraud across multiple channels

Investigators revealed how fraudsters exploit different communications channels to perpetrate financial fraud, primarily account takeover (ATO). Fraudsters are using phone centers, along with stolen customer credentials, such as SSN and DOB. Attendees also reported online fraud using stolen or hacked login information, as well as forged paper documents used to open new accounts and change personal information within existing accounts.

Data breaches are powering fraud

Retail banks are seeing victims of high-profile data breaches become victims of financial fraud. Conference attendees advised banks to take a multi-layered approach to fraud detection and prevention, using a series of ID verification and ID proofing technologies – as well as an internal “blacklist” of known frauds across DDA and credit accounts – to ensure they stymie more ATO fraud schemes before they can hit customer accounts.

Manual schemes that use social engineering are growing

A financial institution attendee reported an uptick in fraud from phone centers, focused on callers phishing for information about customer credentials. This company is revamping its customer service training to detect people phishing for information. These callers frequently have bits and pieces of customer identity they use to perpetrate the fraud, often acquired through data breaches. The company is also exploring solutions that identify IP addresses with high rates of fraud or past fraud losses as a way to better identify callers at the other end of the line.

Mobile and peer-to-peer payment fraud is an emerging concern

Attendees discussed the rising tide of mobile wallet and peer-to-peer payment fraud schemes, using Zelle, Apple Pay, Venmo and other payment systems to gain access to customer profiles that are tied to DDA or credit accounts. Investigators stressed the need for real-time fraud tools that would help detect more mobile payment fraud by screening email addresses, IP addresses and other digital “fingerprints” that may not currently be tracked by financial institutions.

While fraudsters have become more organized and are implementing technology to automate their schemes, we are encouraged that the industry is fighting back with technologies to thwart these nefarious efforts. Today, many banks are using a several data sources (including industry consortium data) – compiled and delivered quickly – in addition to their own data sets to catch fraud before it results in losses. Banks also need to be ready not just for today’s schemes and scams, but for a now-unknown set of future fraud risks. Therefore, banks and credit unions require solutions that will give them the power to add capabilities, integrate new data sources, and configure business rules—all to help ensure that the bank’s assets and customers are well-defended from fraud attempts.