Fraudsters have leaned hard into the unprecedented market incentives presented by pandemic-related disruptions. Depending on who’s doing the counting, identity fraud in its various forms shot up between 30% and 100% in the United States in 2020, and the numbers continued to climb in 2021. Similar trend lines can be seen for COVID-19 relief fraud, social engineering, card fraud and other scams.
For banking institutions and their customers, fraud losses have annually run into the tens of billions of dollars for years. But in the pandemic era, the potential reward for scammers has skyrocketed. The heavy flow of government stimulus funds intended to mitigate COVID-19’s impact created a larger opportunity set for crime, while the many millions of digital-banking novices created new possibilities for both clever and workaday crooks.
We explore ways to stem the growth in banking-related fraud in this month’s BAI Executive Report.
The report’s lead article, by Ed Lawler, describes those working to protect banks and credit unions and their customers from fraud as players in a perpetual game of Whack-a-Mole: Focus on the issue in front of you, and up pops a costly new problem somewhere else. Banks are employing a range of strategies in their attempts to limit the number of moles in play.
The challenge for banks has been to provide effective protection without degrading the user experience, but some say we already have the key to achieving that balance. “The…
