Last week, Bank of America Corp.’s head of U.S. equity and quantitative strategy, Savita Subramanian, said something very interesting about the S&P 500: “The S&P 500 has essentially turned int...
As the industry and consumers are adjusting to a new normal after the global spread of COVID-19, fraudsters are changing their schemes to prey on the heightened anxieties that people are experiencing during these uncertain times. In this blog post, we'll be revisiting four fraud trends that are impacting consumers and financial institutions. None of these schemes are particularly complex, but, as criminals often do, they are fine-tuning their tactics to capitalize on the fear and compassion that people are experiencing during the pandemic. For each of these schemes, we'll explain the methods criminals are using to execute the frauds; the risk these frauds represent to your institution and your account holders; the channels through which the schemes are being perpetrated; and the methods you can use to help mitigate the risks of these scams.
The first trend we'll discuss are imposter scams. Imposter scams involve criminals contacting consumers and attempting to obtain personal and banking information by impersonating agencies that are associated with COVID-19 or the U.S. government. These include, but are not limited to, the World Health Organization, Centers for Disease Control, Internal Revenue Service, and other agencies. The risk associated with these types of scams is the exposure of data that could be used by cyber criminals to move money or obtain sensitive personal data such as Social Security numbers and bank account information.
Most recently, scammers have been targeting consumer unemployment benefits and small business loans, as well as posing as contact tracers and utility companies to trick people into providing personal information and funds. Scammers posing as contact tracers may ask for money, a consumer’s social security number, financial information, or immigration status. Scammers posing as utility companies threaten to turn off consumers’ utilities if they do not quickly pay the fraudsters.
Criminals will attempt to exploit consumers through many channels, including email, SMS messaging, messaging services like WhatsApp, and even through direct calls to consumers.
Related Reading: Beware COVID-19-Related Scams
It is important for financial institutions to help raise awareness of these types of scams, both internally with your employees and externally with your account holders. Risk management teams should also increase monitoring of transactions to COVID-19-related agencies. Your institution may be able to help identify concerns and take action before account holders are even aware that they've been duped.
One of the most disheartening online trends has been the effort to steal funds from individuals who are sympathetic to a cause and who willingly give money to what they think is an organization that is aligned with their beliefs. In charity scams, criminals have begun to impersonate nonprofits affiliated with the pandemic or civil rights organization. They target an unsuspecting consumers, soliciting them to make a donation for a false cause. All channels are subject to this type of risk—even online advertisements can lure consumers into giving money to false charities.
To mitigate this type of risk, internal and external awareness is, once again, a major defense for this kind of scam. Armed with information, consumers can make more informed decisions about their charitable giving. For your organization's risk teams, increased monitoring of outgoing funds to pandemic-related charities may help identify this type of activity. In fact, several of these scam charities are documented on the Federal Trade Commission website.
Possibly the most difficult of scams to identify and measure are those related to product purchases. These scams are difficult to pinpoint because the scam involves selling consumer products with questionable or no efficacy. Even if the capabilities of the product are not backed by measurable and repeatable results, the buyer themselves may perceive the benefits of the product. The risk of this type of scam may entail theft of consumer funds to pushing ineffective products, and may include situations from the consumer never receiving a product they’ve purchased to simply wasting one's money on treatments that do not deliver on their claims.
Similarly to other scams, this scheme can be perpetrated through just about any medium, but they are most prevalent on online and messaging channels. Given the variables involved with these product claims and the subjective nature involved with how the product works for each buyer, raising awareness with consumers is once again the most powerful defense.
Both the Food and Drug Administration and the Federal Trade Commission have helpful resources to identify product scams and direct consumers to legitimate resources. Purchases for products that appear to be for COVID-19 vaccines, treatments, cures, or home testing kits should be immediately flagged, since there are currently no approved vaccines, treatments, or cures, and because many scammers have begun to sell fraudulent home testing kits online.
Our fourth and final trending form of COVID-19-related cyber-crimes are investment scams. These scams are similar to product scams, except fraudsters seek investments rather than purchases. Many of these companies are luring consumers into investing by claiming that their stocks will sharply increase as a direct result of the effect their products will have on the pandemic. Individuals who invest in these scams have a substantial risk of being involved in a “pump and dump” investment scheme in which the scammer profits by increasing the demand of the stock and subsequently selling their own stakes at an artificially inflated value, leaving investors with shares that will typically decline sharply in value shortly thereafter.
These scams can be effectively perpetrated through online messaging channels and direct call channels, and once again, awareness is the best defense. Informing account holders about these types of schemes may keep them from purchasing these risky investments. For more information about known investment scams, the Securities and Exchange Commission has published an alert regarding coronavirus-related investment risks.
SWBC Payments advises financial institution clients to inform consumers of scams and red flags. We also help financial institutions optimize their payment options.
As a payments compliance supervisor, Elizabeth Cardenas is responsible for identifying fraud and money laundering concerns in electronic cash management (ECM) to support SWBC's Payments clients. Elizabeth is CAMS certified, has a bachelor's degree in modern languages and linguistics from the University of Texas at San Antonio and is fluent in Japanese and proficient in several other languages.