When a trained employee intervenes in a fraudulent bank transaction, they can stop a scam “before a single dollar leaves the account,” said Jilenne Gunther, national director of an AARP program focused on protecting consumers from fraud.
Bank employees that place a hold on a suspicious transaction, or delay the transaction to ask questions, stop the scams about half the time, Gunther said, citing research from AARP’s BankSafe Initiative.
Gunther spoke Wednesday, alongside Fifth Third’s head of fraud prevention, Kris Edwards, and Morrison Foerster partner Avy Mallik, the former general counsel of California’s Department of Financial Protection and Innovation, at a panel hosted by Payments Dive and Banking Dive.
Training on warning signs is ongoing for Fifth Third staff, Edwards said, and the bank maintains mechanisms for its retail staff to share information on fraud and threats up the chain.
While large institutions like Fifth Third often have dedicated fraud intelligence teams, smaller banks and fintechs may not.
But size is not an excuse when things go wrong – and institutions, no matter the size, need to have a handle on it, Mallick said.
“Speaking as a former regulator, the regulator will expect you to have the right systems in place to find these red flags and to have the right amount of methodology to understand the typology of fraud and assess what the best course of action is,” he said.
To avoid becoming the weakest link, Mallick said, small banks and fintechs with limited resources should work with well-reputed vendors “that do the work for them, while also making sure that the licensee has the right amount of oversight over the vendor.”
“It’s not an easy task,” he said, but engaging the right partners “can help catch [and] solve problems before they become much larger storms.”
The onus for scam prevention should not focus solely on banks, Gunther said. “We need to start looking upstream.”
With an average loss of $17,000 per case, she said, citing suspicious activity reports, “we need to bring in these social media companies at the point where [scammers are] first contacting consumers, to look at shared liability,” Gunther said.
Edwards echoed Gunther’s point, adding it’s a focal point of his when discussing the issue with regulators, including at the Office of the Comptroller of the Currency and the Federal Trade Commission.
“[A] scam does not start with the bank,” he said. “That's the last piece where money moves.”
While the panelists didn’t mention any specific social media sites, a report Thursday from the Consumer Federation of America pointed to Meta and its Facebook, Instagram and WhatsApp sites as part of the problem.
For its part, Meta issued a statement Thursday explaining how it’s seeking to battle scams, namely by educating consumers, providing more anti-fraud features and assisting law enforcement.
