The Rise in Scams: Why Institutions Must Prepare Now


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Prepare Your Organization for Surging and Increasingly Complex Scams

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Scams have become the fraud of choice for bad actors looking to extract value from victims. In response to better authentication and fraud detection technology, bad actors have doubled down on complex impersonation scams, creating sophisticated attacks that attempt to manipulate millions of financial services’ consumers every year.

In 2022 alone, there were 905M human-initiated attacks of all kinds, a 56% increase from the year prior.1 Between 2020 and 2022, consumer reports of scams rose 44%, with losses climbing to nearly $2.7 billion in 2022.2

Scam or digital robbery?

In a scam, fraudsters manipulate a consumer to transfer money to them by masquerading their attack as a legitimate and urgent request. Transfers are often executed through real-time payment apps that let the scammer quickly and irretrievably, move money. If consumers approve a transfer and realize they’ve been scammed, they’ll likely seek restitution. 58% of US consumers are very likely or somewhat likely to leave their institution if it fails to reimburse them for scam losses. 3

Why customer “security” fails

The orchestrators of scams are often crime organizations that operate much like legitimate businesses.
Their scams are sophisticated, incorporating background research and a psychological strategy on their victims. By hijacking consumer legitimacy, scammers are able to defeat traditional fraud prevention approaches and simplistic detection methods.

Scams will only grow in sophistication and volume in the coming years as bad actors harness generative AI technologies to unleash convincing and dynamic deepfakes, produce robust dossiers on targets and make scripted attacks more believable. Meanwhile, consumers will look to financial institutions to deliver safer, more convenient experiences.

Financial institutions must prepare now

Even now, financial institutions face revenue loss and customer churn if they can’t help scam victims identify and stop a scam before value is transferred. Pressure from the public and regulators may soon require financial services organizations to reimburse scam victims.

Regulators and law enforcement will take time to adapt—in the meantime, banks and financial institutions should adopt strategies to understand the parties involved in a scam more holistically, from digital and physical identities and associated attributes, events and behaviors, to the parties’ accounts and actions. By doing so, organizations can reduce financial losses and scam caseloads, improve the consumer experience and protect their brand reputation.

Our latest ebook, "Detect Scams and Warn Consumers with Confidence," is designed to help financial institutions understand the threats posed by scams in detail -- including the three stages of a scam and the capabilities available for detection and mitigation.

Download the ebook and visit our webpage to learn more.

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1LexisNexis® Risk Solutions Cybercrime Report 2022 (May 2023)
2Federal Trade Commission “Consumer Sentinel Network Data Book 2022” (February 2023)
3Datos Insights “Consumer Scams - Rising In Velocity And Sophistication” (July 2022)

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