Detect and mitigate more authorized transfer scams

Between 2020 and 2022, consumer reports of scams rose 44%, with losses climbing to nearly $2.7 billion in 2022.¹ Many financial executives believe these numbers underrepresent the true scale of the problem.²

Scam victims increasingly expect financial institutions to reimburse lost funds despite authorizing the transfers.³ The decision not to reimburse may bring the penalty of a lost customer and potential brand damage via negative press and complaints on social media platforms.

Organizations that cling to status quo fraud prevention approaches or simplistic scam detection risk increased financial losses, frustrated consumers and reputational damage. Firms combating more scams have a higher True Cost of Fraud™, including more spent on manual investigations:

Unfortunately, financial institutions often struggle to stop authorized transfer scams. Unlike direct attacks that exploit technical weak links, scams abuse consumer emotion and desire to trust.

Legitimate account holders don’t raise suspicions of conventional fraud analytics and authentication approaches. Those systems are designed to recognize legitimate consumers with minimal interruption.

The victims’ financial institutions often lack valuable insight into the risk of the receiving account and the corresponding account-owner. Malicious transfers occur for lack of complete information. Malicious transfer recipients often forward the value out to mule accounts as soon as the victim concludes the transfer.

Some malicious transfers go through because the sending financial institution lacks the confidence to interrupt the transfer or the ability to warn the prospective victim effectively. Whether or not reimbursement occurs, victims may lose confidence in their financial institution.

Consumers expect safe and convenient experiences, including protection from scams. Two-thirds of U.S. consumers say they would likely close their accounts with a financial institution that fails to reimburse them for losses due to authorized transfer scams.⁴ However, 38% of consumers say they would leave an institution if a legitimate transaction was flagged as fraud and declined.⁵

Scams put financial institutions in a difficult position. If resources aren’t reallocated from other organizational priorities today, the problem will likely continue to grow.