By Roger Baird on Tuesday 23 July 2019
Biometrics, tokenisation and big data can cut bank fraud, but customers still need their wits about them.
Fraudsters managed to siphon £1.2bn from the bank accounts of British customers last year, according to banking lobby group UK Finance.
There are a wide variety of scams con artists use to part account holders from their cash involving bogus phone calls, fake emails, bank cards and ATMs.
Banking fraud breaks down into two types.
Authorised fraud - where customers are fooled into making payments to another account controlled by a criminal.
Unauthorised fraud - where the account holder does not authorise a payment, but one is nevertheless is carried out by a third party.
Last year, fraudulent card payments accounted for 56 per cent of all banking scams, followed by authorised fraud at 30 per cent, remote banking (criminals gaining access to an account holders internet, phone or mobile banking details) at 12 per cent, with bad cheques accounting for 2 per cent of fraud.
Banks and financial services firms managed to prevent 1.7bn of unauthorised fraud last year, according to UK Finance, which is the equivalent of £2 in every £3 of attempted scam being stopped.
However, a loss of £1.2bn is a serious piece of change, and is something that every customer wants to avoid.
Here are common scams you should be aware of:
Bank card scams
There are a large number of credit card frauds, and one of the most common ways to get your card details is when shopping online.
Unsecured websites that only say http rather than https in their website address can be attacked and spyware can be installed on your computer, so scammers can see everything you’re doing online.
But other scams are more low tech. Letters with new credit or debit cards can be stolen. You will then get a phone call from the person with your card asking you to confirm a few details which allows them to start using it.
Combatting bank card scams
Don’t use websites that only have http in the address rather than https and never use public Wi-Fi in coffee shops or shopping centres to shop or bank online.
Make sure your antivirus and operating system software is up to date. Strong passwords can also help you protect your online accounts.
Token transactions are increasingly being used for UK card transactions. Law firm Taylor Wessing explains: “Tokenisation is where a unique ‘token’ is generated for each transaction, keeping all sensitive data, such as the cardholder's name and card number, stored remotely. So, even if a fraudster obtained the ‘token’, they couldn’t use it to identify any personal information.”
Banks are also increasingly turning to biometrics to beef up security.
In April, NatWest became the first bank in the UK to trial fingerprint technology on debit card payments over £30. The card contains an electronic copy of the customer’s fingerprint on one corner. The customer places their finger on that part of the card while waving it at a retailer’s payment terminal, it will authorise the payment. The customer will not have to type in their PIN number, which means hackers will not have the chance to access it.
Bank transfer scams
This is perhaps the most common banking scam, and involves customers transferring money from their own accounts.
Customers get a phone call claiming to be from their bank usually alerting you to a security or technical problem related to their account.
They will ask you to transfer all the cash in your account into a ‘safe account’ until the problem is solved.
However, this call does not come from the customer’s bank. If the transfer is made, the funds will be instantly salted away to other accounts around the world.
Combatting bank phone scams
The first thing to bear in mind, is that a bank will never ask you to transfer money into a ‘safe account’. It simply does not happen.
Also, banks will never ask you to reveal personal information such as your PIN, or any passwords.
If in any doubt, hang up the phone on the person who purports to be from your bank and call your lender directly using the number on your credit or debit card. If there really is a problem with your account, assistants there will be able to tell you.
In many ways, this is the hardest scam to fight against, because it is the con trick at its most basic. One person charming, or alarming, another person, for financial gain.
Banks, prefer, email communication, but there will always be a need for customers to call on occasion.
Phishing scams, or fake emails, are common and usually use a trusted company, such as your bank, to get you to gain your confidence.
These emails instruct you to click on a link in the message and login to your bank to approve a transfer, or to confirm other details.
The link takes you to a fake website that allows scammers can then use your information to access your account and transfer money.
Combatting phishing scams
Take a close look at these emails. What do they call you? Fraudsters generally use a generic welcome, such as Dear Sir/ Madam or Valued Customer. A real email from your bank will address you by your name.
Also, take a look at the email address. Fake emails may come from an address which is either just a series of letters and numbers, or have a spelling mistake.
The best thing to do however is not to click the link. If you think the email might be genuine, go to your online bank and login as normal and see if you have a message.
Law firm Taylor Wessing says the drive towards “real-time payments gives rise to greater risks of fraud and money laundering.” But the firm adds big data and the cloud can play a role here. The firm adds: “Data analytics are able to monitor a person's usual spending habits and flag an unusual transaction, thereby identifying potentially fraudulent transactions faster and more accurately than before.”
Reporting bank scams
Contact your bank as soon as you realise something has gone wrong and tell them exactly what happened. They made need to put stops on your accounts.
Secondly, get in touch with Action Fraud Alert by either calling 0300 123 2040, or online.