5 Tips Every Financial Services Agent Needs to Know to Prevent Fraud

By Matt Peoples

Throughout the financial industry, one of the most challenging issues is preventing fraud. While fraud can happen in many different areas of a financial company, one of the key areas where criminals target is the contact center.

Just how serious has contact center fraud become? According to Pindrop Labs 2016 Call Center Fraud Report, the number of fraudulent calls into contact centers has grown by 45 percent since 2013. While all industries are being hit, banks, credit card issuers, brokerages, and other financial institutions are prime targets because they are particularly lucrative for fraudsters. In retail banks, the fraud call rate is one in every 1,400 calls. For credit card issuers, the number jumps to one in every 800 contact center calls.

Just how costly is this problem? Banks, brokerages, and credit card issuers all average about $11 million annually in fraud exposure. For credit unions, this jumps to approximately $29 million annually. When you consider that the average credit union member uses multiple services, fraudsters who are able to pass credit union authentication can gain access to a wide array of accounts and funds.

The Human Element
Financial contact centers must be aware of their specific vulnerabilities and implement prevention solutions. This includes educating financial services agents who work in the contact centers to be on the watch for suspicious callers. Interestingly, 61 percent of all fraud activity can be traced back to the contact center, according to Aite Group. Thus, agents on the frontlines of service can be vitally important in preventing fraud from occurring. Here are eight facts they need to know.

Fraudsters Are Friendly
It’s natural to think of a fraudster as a shady character working alone in a dark room. Yet, fraudulent activities are often generated from large-scale boiler rooms where individuals are trained to develop emotional and personal connections to manipulate agents. This is called social engineering, and it unfortunately causes many agents to take actions that are not in the best interest of customers.

Phone Numbers Can Be Spoofed
Most contact centers have caller ID, and the phone number that appears is one source of identification. Unfortunately, this has tripped up many agents who let their guard down when a call appears to be coming directly from a customer’s phone number. Fraudsters have figured out how to use Skype to create a spoofed caller ID that looks like a customer’s phone number. This scam has led to cases of fraud in numerous banks and highlights the need for improved fraud prevention strategies.

PIN Numbers Are Easy to Obtain
Criminals will often capture PINs from “skimming” automated teller machines. Then, they will willingly provide this number to agents to obtain additional data from an account. Thus, it shouldn’t be the sole source of authenticating a customer under any circumstance.

Other Forms of ID Are Easy to Steal, Too
Fraudsters often call into contact centers prepared with stolen account numbers, phone numbers, addresses, date of birth, and social security numbers. This is why it’s important for agents to stay on the watch for unusual requests such as out-of-the-country transfers and changes of addresses and PIN numbers.

Beware of Telephony Flooding Attacks
Fraudsters will sometimes use the tactic of trying to overwhelm and confuse agents with a flood of calls at one time. If an unusual trend in one type of calls begins to happen, agents should be armed with the ability to alert management.

Preventing Fraud in the Financial Contact Center

Although cases of fraud in financial contact centers is rising, new technology is being developed to combat it. Some of the latest solutions to stop attacks include

Phone Printing – Because caller ID isn’t a reliable way to identify a caller, a new way of identifying callers was needed. This led to the development of phone printing, which serves the same function for phone calls as device fingerprinting does for online interactions.
Biometrics – A useful element of layered security is voice biometrics that can capture fraudster voices by comparing them with legitimate callers. When combined with phone printing, biometrics can stop many attacks before they start.
Predictive Analytics – New solutions are available that use sophisticated algorithms to detect caller anomalies and characteristics to proactively prevent fraud.

The Hidden Cost of Fraud
Beyond the obvious loss of funds due to fraudulent transactions, there are other hidden costs that need to be calculated when determining how to budget and plan for fraud prevention. These include:

  • Decreased Customer Experience – Customers expect low-effort experiences. When they have to navigate through multiple steps to establish their identity, they can become frustrated and are more likely to abandon journeys.
  • Brand Damage – Publicly reported contact center fraud attacks and data breaches can dramatically impact a brand’s reputation. With customers more likely than ever to switch financial institutions, reputation management has become more important than ever.
  • Added Operational Costs – The time it takes to identify callers increase the cost of every call. Thus, solutions that streamline the authentication process typically offer a high return on investment.
  • Increased Regulatory Risk – Financial contact centers that are targeted by fraudsters also face regulatory fines, legal fees, and other damages that can take a significant bite into profits.

Fraud is a problem that no financial institution can ignore. The stakes are high, and criminals are becoming increasingly sophisticated. Thus, it’s vital to stay on top of the latest technologies and solutions.