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Tech-Infused Social Engineering - A conversation with Frank McKenna, Chief Fraud Strategist, PointPredictive
683 Plays3 years ago
In episode 13 of Scam Rangers podcast, we chat with Frank McKenna, a fraud and scam fighter with 30 years of experience. We discuss the use of technology in combination with social engineering tactics to execute online scams, including bots, voice imitation, and deep fakes. Frank emphasizes the need for proactive measures to stop fraudulent transactions, and the importance of being passionate about fraud-fighting. The episode offers valuable insights and advice for both fraud fighters and non-fraud fighters, highlighting the importance of staying informed and vigilant to protect ourselves and our finances from scams.
Frank on Fraud: https://frankonfraud.com
ScamRanger: hrrps://scamranger.ai
This podcast is hosted by Ayelet Biger-Levin https://www.linkedin.com/in/ayelet-biger-levin/ who spent the last 15 years building technology to help financial institutions authenticate their customers and identify fraud. She believes that when it comes to scams, the story starts well before the transaction. She has created this podcast to talk about the human side of scams, and to learn from people who have decided to dedicate their lives to speaking up on behalf of scam victims and who take action to solve this problem. Be sure to follow her on LinkedIn and reach out to learn about her additional activities in this space.
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Transcript
Introduction to Scam Rangers Podcast
00:00:03
Speaker
Scam Rangers, a podcast about the human side of fraud and the people who are on a mission to protect us. I am your host, Ayelet Bigger Levine, and I'm passionate about driving awareness and solving this problem.
Guest Introduction: Frank McKenna
00:00:21
Speaker
Welcome to episode 13 of Scam Rangers. Today's Scam Ranger is passionate about making sure we all know what's going on in the fraud space. Frank McKenna is a lifelong fraud and scam fighter and an advocate for fraud analysts, investigators, fraud managers, and fraud data scientists. He's dedicated his entire career to fighting fraud and scams
00:00:44
Speaker
just like they do each and every day. He's the author of Frank on Fraud, a blog that covers the latest fraud trends as well as the co-founder of anti-fraud company Point Predictive. Hi Frank, how are you?
Frank's Support for Scam Rangers
00:00:58
Speaker
Welcome to the podcast.
00:01:00
Speaker
Oh, I'm glad to be here. You know, I love your, what you're doing with scam ranger. Um, I actually highlighted it in my newsletter because I was just really happy to see someone like you doing something like this that educates fraud fighters and banks and consumers about scams. I just think it's so important. So thank you for having me. Great. Thank you.
00:01:22
Speaker
And you know, one of the things that I really like about your blog is how you, you create the information in a way. You take articles that are out there in the news and first of all, hard to find. So you aggregate everything for us and makes it really easy to find it, but you also deliver in a way.
00:01:39
Speaker
that really anyone can understand and you make it accessible to the broader community. Both fraud fighters at all different verticals or different areas of expertise, if it's e-commerce or merchants or bank fraud fighters, but also people who are not fraud fighters could really understand because you've summarized things and explain them in a way that's really accessible. So thank you for that.
Frank's Career Journey in Fraud Fighting
00:02:04
Speaker
Oh, that's great. Yeah, it's good to hear. Yeah, I think a lot of times fraud is actually a pretty exciting subject. So I really like to write about it, but it impacts everybody, you know, it's not only just fraud fighters, but fraud fighters, families, relatives, people they meet. So it's really one of those things that, you know, I'm, I'm passionate about just like you are. So I appreciate the kind words.
00:02:29
Speaker
It really resonates. And fortunately, it's a growing problem. So we'll talk about that a lot today. Before we dive into it, I wanted to ask if you can tell me a little bit about yourself, how you got into this area of expertise to fight fraud and educate people. Yeah, you know, it's a I guess my worst job turned into my best job. So it's now been 30 years ago, I was looking for a job after college.
00:02:55
Speaker
And I couldn't find one, I finally got one in a call center working for a credit card company. And it was a terrible job working 5am to 1pm just people calling and yelling at me all day long. But when I got one call one day and it was a
00:03:08
Speaker
kind of a guy trying to pretend like he was an old lady and he was trying to do an account takeover on a credit card account. And I knew it was, I knew it was something was wrong. So I asked my supervisor what I could do about it. She said, call the fraud department. One thing led to another. I befriended one of the fraud analysts in that department and a job came up.
00:03:27
Speaker
And I escaped the customer service area and got into fraud. And that was now 30 years ago. And I never looked back and I ended up going from banking to working for vendors and doing a lot of consulting. I got to travel the world working for a company here in San Diego called Agency Software.
00:03:46
Speaker
after that i ended up starting two companies so i went from a fraud analyst to a consultant to kind of an entrepreneur and then as part of that i just started writing about fraud too so i created the frank on fraud so it's been a 30-year journey i've loved it i'll never do anything else it's my whole career i love at the beginning it's uh when you talked about how you
00:04:08
Speaker
found that phone call to be fishy, no pun intended, good things come to those who care.
Passion and Hiring in Fraud Prevention
00:04:14
Speaker
Not only wait, but care. You cared about it and you went above and beyond and that's how you got this opportunity. So that's pretty cool. Yeah. And it's exactly when I hire people at the company I'm at now, the number one thing I look for is how passionate about it are you? Because if you love it,
00:04:32
Speaker
you're going to be great. Right. And I always tell people if you want a job, if you think you love fighting fraud, you're going to have a great career. And so if you got to be passionate about it. So how did you get to starting a blog really, you know, it's very intense to work as a fraud fighter, and there's always something going on, always fires to put out writing a blog takes time and consistency. So how did you get to, how did you get to write it? And how do you get to stick to it too?
00:05:01
Speaker
Yeah, that's the tough part, right? When you start it, you're compelled now to continue to do it. But I started it in 2016. I was asked to write a white paper for a big corporation that was on fraud, and I wrote it.
00:05:17
Speaker
And I turned it over and month after month I kept taking that white paper and rewriting it and spell checking it and it never went anywhere. And so I said, well, I'm going to just start writing for myself because I think I can actually write for people to read. And I just started producing content.
00:05:35
Speaker
day in and day out and just writing about whatever I saw like on Google searches and I was like, that sounds interesting. I bet somebody would want to read that. Um, and I did it for two reasons to educate, but also to learn. To me, it was all about every time I wrote a blog, I learned more and it helped me in the next blog or the next conversation I had with somebody. So I, I really wrote it just to kind of learn, but also to educate as well.
00:06:00
Speaker
And now, like, you know, you know, from doing a podcast that it ends up kind of consuming your weekends and your free time.
Challenges in Scam Victim Outreach
00:06:10
Speaker
But, you know, my family's very supportive of me doing this little hobby that sometimes pulls me away on weekends. That's amazing. And I bet fraudsters are not very happy with your blog. So anything that you heard from them?
00:06:25
Speaker
I do. Yeah, I hear from there's different people that reach out to me. I get a lot of scam victims reaching out to me because they read the article and they don't know where to turn.
00:06:35
Speaker
I get people that think I'm a fraudster and I can help them commit frauds. That's kind of odd. I get probably five to 10 messages a week where somebody wants me to help them create a synthetic identity or how to get from fake pay stubs and things like that. But then every so often I get messages from people that are committing fraud that are not very happy. They don't think what they're doing is fraud. So if I write about a fraud case, sometimes I hear from the suspect or the person that's been charged.
00:07:05
Speaker
been threatened with lawsuits, all of that fun stuff. But I also have get, I also get a lot of, I guess you call them take a hacking into the account, like every night.
00:07:16
Speaker
I get up in the morning and I look how many people try to hack into Frank on fraud. It's, it's between five to 6,000, just any given night. That's from all over the world. Wow. Yeah. It's kind of strange. And I don't know what, what they're trying to do when they get in, but it's, it's, it's kind of amazing what they're, I don't have no idea what they would do to maybe take it down or write a blog post for me. I don't know.
00:07:41
Speaker
Now let's talk a little bit about the topic of our conversation today.
Fraud Trends and Consumer Targeting
00:07:44
Speaker
And that's really looking at fraud trends, looking at what's going on, modes of operation, technology, and just kind of the overall, the problem and where we're heading with scams and fraud in general. So the FBI internet crime complaint center published a report that really shows the trends between 2018 and 2022. And we see that the number of complaints to the
00:08:09
Speaker
FBI IC3 is growing year over year. And actually this year, the number of complaints actually declined a little bit, which is really interesting and raises a question. So last year it was 850,000 and this year it's about 800,000. However, the reported losses have really increased significantly from 7 billion last year to 10.3 billion this year.
00:08:34
Speaker
So the number of complaints went down a little bit, but the number, the amount of losses grew. So we see a few things that are going on. First of all, we talked about crypto investment scams or investment scams in general, which are really with a single case of a scam, the cyber criminals are getting a lot more money. So a lot more bang for their back.
00:08:57
Speaker
In the past, we've seen the scams from $200, $2,000, $5,000 to now we're talking about millions of dollars that they are able to take. But I wanted to ask, do you see a shift from account takeover fraud, identity theft, new account fraud to scams? Is that a shift or a trend that we're really seeing?
00:09:21
Speaker
Yeah, I think there's a shift. I don't think the identity theft account taker has necessarily gone away, but I think the shift is the scams are going up. I think what's happened is that banks have done a really good job, I think, in stopping certain types of fraud that they take losses on, like identity theft and others. They've done a lot of investment into identity theft. But in the process, what you find is that
00:09:50
Speaker
the fraudsters end up doing an end around and the best way to bypass the technology is go right to the end customer and try to social engineer them. So I think what's happened is as banks have gotten really good at stopping those traditional types of fraud, that the fraudsters and scammers are just saying, let's just go to the end customer. So that kind of investment in fraud is pushing
00:10:14
Speaker
more into scams. And so I think that's the shift that we're seeing is the fraudsters are figuring out the weakest link is often the consumer. Right. And we talked a lot in the past episodes about the types of technologies used for fraud, such as device identification, transaction monitoring, behavioral biometrics and others, network intelligence,
00:10:35
Speaker
So those controls have made a difference and made an impact where, as you mentioned, the banks are liable for account takeover fraud and need to reimburse customers. What is happening from a technology perspective within the financial institutions when it comes to scams?
Technological Advancements in Fraud Detection
00:10:52
Speaker
What do you see there?
00:10:53
Speaker
This is the big frontier. This is where I think a lot of investments going to go into scam detection. And a lot of it started last year with Elizabeth Warren's congressional hearings, I guess you could call them, when all the CEOs were there and it appeared like they couldn't really answer her questions. The public was outraged. It was all around Zell, right? That was the big, big issue.
00:11:19
Speaker
And I think that prompted a lot of introspection from the banks about, Hey, this is actually now a very big problem that the public is going to expect us to do something about. And they are. So I, I know I've heard from banks that there. Some big banks, their number one investment is going to be in scams this year for technology. Um, so that's where it's headed is a, I think a significant investment scams. I think it's going in the right direction, but it's going to be a many year process for sure.
00:11:49
Speaker
And do you think it's going to focus initially on sell or is it going to be broader than sell? And the reason I'm asking is if we look at the UK, which we love to compare what's going on in the UK with the US, when they're talking about regulation unfolding for reimbursement of customers for scams, it's much broader than the P2P payments. And they're talking about a really broad range that goes into bank impersonation scams, romance scams.
00:12:18
Speaker
many different types and it's much broader than the one channel of Zelle here from the reimbursement perspective. So I'm wondering when you hear from financial institutions here that they're looking to prioritize technology investments and process investments to fight scams, is it broader than Zelle?
00:12:39
Speaker
Yeah, it's broader than so, for sure. It's transactional monitoring. It's customer education. It's biometrics. It's all those things that they've done for fraud, just doing it for scams now, using the infrastructure, putting more people on it.
00:12:58
Speaker
putting more, you know, more cues, you know, maybe more modules into those platforms that they've invested in. It's going to be broader than that. And I think it's going to unfold just like it has in the UK. I think in the US experience, we just have to look what's happened over there. You know, it started with kind of public shaming back in 2016.
00:13:18
Speaker
I think said something about, you know, we're not going to reimburse customers.
Complexities of Identifying Scams
00:13:23
Speaker
So it started with public shaming. The banks voluntarily agreed to start to reimburse customers. Then it went into reporting about what the banks were doing. And now it's at like a benchmarking phase where banks over there can't do enough.
00:13:38
Speaker
And so they keep investing. So we're going to see the same thing here. And I think banks here have maybe a leg up on what the banks in the UK did because they can learn from the experience of where it's going.
00:13:50
Speaker
I'm really intrigued about the technology side of this because, as you said, they're going to leverage a lot of the technologies for fraud, transaction monitoring. But the question we're going to ask here or going to need a response for is very different, right? Because in account takeover fraud, is it the legitimate user or the customer really transacting here and finding that it is or it's not, right? It's the right device.
00:14:17
Speaker
you know, their behavior, et cetera. But when we want to understand if it's a scam, of course it would be the genuine user, but are they intending to do the right thing or is someone guiding them? So the questions are very, very different. And these are questions of intent of what circumstances are they under when they're doing this. And I think the one question that we could definitely take from transaction monitoring is, is this typical for this user or not? That's right.
00:14:47
Speaker
Right. It's exactly. It's not going to be typical and they're not going to be receptive. So oftentimes you're with a credit card fraud, you call the customer this year charge. No. Okay. We're going to close your account. It's a, it's a one minute conversation as victim of a scam.
00:15:05
Speaker
is often going to not believe you. They're not going to believe that they're a victim. They're going to be resistant. And even though you might have tried to stop it, it'll go through anyway because you can't convince them. It's going to be a very difficult conversation. And it's also going to beg the question, do you need to proactively stop these transactions, even though the customer is involved?
00:15:31
Speaker
And that's a difficult thing to figure out too, but I think it's going to happen. I think it's going to have to happen.
00:15:38
Speaker
There are going to be a lot of kind of ethical questions around stopping transactions, not stopping. Where does the bank step in proactively versus reactively? And they're going to, and rightfully so, want to minimize the reimbursement and minimize the fraud. So as much preventative technology we can put in place, the more the better.
00:16:02
Speaker
Yeah, we had tried to do this at, when I was a fraud analyst, we had tried to proactively create cues and I worked those cues where I had to, it was basically trying to prevent customers from charging off through, through gambling and things like that. So we would monitor people that were excessively taking out ATM charges consistently at the ATM machines and casinos. So I would call people.
00:16:28
Speaker
but, and they were totally not receptive. And we ended up having to abandon the program because while we could predict that the behavior would lead to charge off, we couldn't interact with the customer to stop it. And I think we're going to find the same exact thing with scams is how do you, how do you walk that fine balance? It's kind of like, how do you fight the chemicals in the brain, right? That's a fight against dopamine, dopamine, the one that you were describing. And it's kind of like, how do we,
00:16:56
Speaker
get around the emotional state that they're in to help them. And as you said, they don't believe it's the bank or they don't believe it's a financial institution and it's really tricky to get them to be in that state where they're receptive to getting the help.
00:17:14
Speaker
So let's shift gears a little bit from the technology that financial institutions will put in place to fight scams and talk a little bit about what you mentioned earlier. So we said that financial institutions have put really good controls around account takeover fraud, which caused the cyber criminals to shift into social engineering. So they had two routes that they could go through. One is
00:17:39
Speaker
despite the technology advancements in fraud protection, maybe find another backdoor. And the other one is going after the weakest link, the human social engineering. A cyber criminal can basically pick up the phone and or send a text message and
00:17:54
Speaker
and try to convince someone to transfer money. And you almost need no technology to do that. But the reality is actually they use a lot of technology, even in social engineering. So I wanted to dive into that a little bit. And we'll talk about kind of the classic modes of operation that they've been using. But with the recent advancements in generative AI and deep fakes, there's a lot going on in this space from a technology perspective as well.
00:18:20
Speaker
So can you tell us a little bit about kind of what technologies, the classic technologies that have been used to support the mechanisms of scams?
Emerging Scam Technologies
00:18:31
Speaker
Yeah, there's some interesting ones. So one of the ones, it's been around now for about 18 months, but it's bots. So about 18 months ago, these bots that were called OTP bots, which basically means one-time password bots,
00:18:46
Speaker
were sold as a service on Telegram and the dark web. And what these services would allow the scammer to do is to purchase credits with Bitcoin, upload a list of people they wanted to scam with the phone numbers, and the bot would go out and kind of robocall or text to these customers and interact with them to try to extract the
00:19:14
Speaker
one-time passcode. So the fraudsters could be, you know, trying to log in, but they could have this bot that was on the side, like their little friend scamming the customer and getting those one-time passcodes and then logging into their bank accounts. So completely like automated attacks on consumers. I think there was a big one, iSpoof.me or something out of the UK. They closed it down. 200,000 people fell for the bot and gave their one-time passcodes.
00:19:42
Speaker
Millions of dollars were extracted from their account. They shut that site down, but there are thousands of other sites that are still in operation offering those types of services. So that's kind of one type of use of technology that I think has been pretty damaging and I don't think that's going away. Well, obviously we got chat GPT now and we're seeing that that is enabling these
00:20:07
Speaker
what used to be really bad emails and really bad texts that were littered with errors that didn't sound right to be pretty well orchestrated texts that consumers will believe.
00:20:18
Speaker
Another use of technology. Now they've got AI for voice cloning. And that is a kind of scary because it's really in its infancy, but you can go to resemble.ai and clone your voice. And you can create a recording of your voice or you can upload samples of your voice and it'll clone it for you. So this is being used to do the grandparents scams and.
00:20:42
Speaker
I think there was one a couple of weeks ago where somebody had recorded a clone to voice of a daughter and they, they played the, you know, help me, help me. And so the, the grandparent actually ended up sending some money. There's, there's a lot of technology that's going in on the fraudsters camera side that is going to make it even harder.
00:21:00
Speaker
Let's distinguish between the mass attacks where it's just whoever will pick up the bait. So the other day I got an email saying that the hardship department has found me eligible to receive some funds or whatever. And I posted it online and apparently a lot of people received that message. So it's not just a mass email. They actually changed it and put my name. So they probably got some information from a data breach or did some research and put the names in the emails.
00:21:28
Speaker
And those type of mass emails that are not personalized do not have, except for my name, maybe a lot of personal information, those they just send out in the thousands. And that's where I think that chat GPT can help. When it comes to voice cloning, they need to do a little research and a little work. It's more complex, but the, again, the return on investment is likely greater, right? Because you, you put in the hooks to manipulate people to believe and
00:21:59
Speaker
create a sense of urgency around it. And it reminds me of the gift card scams where they would actually go and they still do it. Go into LinkedIn or whatever tool that they use to find who works with who and who is CEO of who and where they work, and then to send those gift card scams and convince people to listen to the boss or the CEO and go get it done, right?
00:22:19
Speaker
That's right. Yeah. The more homework they do, the more they get paid. And that's why those BECs are so profitable. Why the targeted ones to you with your name, those are more profitable for them. So yeah, the more homework they can do, the more they're going to get paid. That's kind of scary because there's a lot more of that going on.
00:22:41
Speaker
Another really interesting and unfortunate use of technology is deepfakes. I want to give three examples of how deepfakes are used in scams. The first example is bromance or relationship scams. What happens in these scams is typically the criminal will create a fake profile with pictures taken from someone else's profile.
00:23:01
Speaker
And they will use Deepfake to create videos because the person that they're in a relationship with wants to see a video of them. So they'll ask, can you send me a video? And then they'll post a video saying something like, hi, it's a lovely day. I'm outside. It's a video of a cyber criminal.
00:23:20
Speaker
Actually using the technology so you see the criminal standing in front of a camera inside on their computer could be someone young and they took a picture of or a profile of an older man and you can see that on their screen there's the
00:23:35
Speaker
Image that ultimately the the victim will see which is someone standing outside Older the person in the profile they create that deep fake and the person who's in that thinks they're in the relationship sees a video of the person who's in profile which creates more Trust and more of a feeling that they're in a real relationship. So that's pretty scary number one Second example is a fake job example. So in the fake job example
00:24:03
Speaker
The criminal is looking to hire someone, and when they hire that person, they ask them to pay for a lot of things, like order a computer and pay for all these things on the new job. And they tell them that they're going to reimburse them later, but they never do.
00:24:19
Speaker
So in this scenario, the fake job one, one of the parts of the process, typically people don't just accept a job or shouldn't accept a job without talking to someone. But then the recruiters use a profile of someone online pretending to be from a company or a recruiter that's legitimate. So they'll use a legitimate profile. But when the person is having a conversation with them, they'll use deepfake to
00:24:47
Speaker
impersonate that person who is legitimate. So that's number two. So the third one is a fake applicant. So this is someone who is trying to get into a company or infiltrate the internal systems of a company and try to be hired for an IT role.
00:25:06
Speaker
So what they'll do is they'll actually kind of steal a profiler or say that there's someone on linkedin who has a lot of experience on a lot of credentials the profile is not new and i'll try to imitate that person with a reach out and they'll say i'm this person and then when they are interviewing.
00:25:24
Speaker
They will use deep fake to impersonate that legitimate it professional and they will get accepted their tech savvy and they will get accepted to these jobs and then they have access to. Internal systems admin rights keys to the kingdom so those three examples are just the beginning there are many more.
00:25:44
Speaker
Well, the scariest thing is just how relatively new it is and how fast it's getting better. I was researching this because I was thinking about Deepfake in a good way, which was like, if I ever wanted to do presentations and I couldn't attend, could I make it appear like I was really presenting? So I researched it for about $20,000.
00:26:10
Speaker
Do a very professional avatar clone of me, which would be just like you and me interacting. You would think it's real, but you'd go into studio and they basically, it takes about two hours and they, they clone you video wise. And then you can go to another company called well said, and they'll actually.
00:26:26
Speaker
Perfectly clone your voice. So the combination of those two, I could create a perfect clone. It would cost 20,000, but that price is just going to come down. And we all at some point, maybe it's three, four years, we can all create our own deep fake that can be used for whatever reason. But of course it's going to be used for lots of various purposes. The technology is we're going to be in a deep fake world here in a few years. It's, it's, it is terrifying.
00:26:53
Speaker
So it makes me wonder, when do you think you and I will get down to another conversation about the ethics of accessible AI to everyone? Yeah, I think it's very soon. It's something that a lot of thought has to go into it because it is a brave new world,
Exploiting Financial Crises for Scams
00:27:13
Speaker
you know. So you mentioned BEC a few minutes ago, and we can't talk about BEC without talking about SBB. So Silicon Valley Bank had
00:27:23
Speaker
It was all over the news in the last week or a week and a half ago and we've seen a lot of companies, startups, VCs trying to get the money out and also companies that offer services to their customers where the funds are transferred to
00:27:42
Speaker
SVB have sent to their customers in new invoices or new details of information. Can you share a little bit? And I saw this on your blog as well. What are the BEC opportunities here and what have we seen? Well, with SVB, it was really interesting because of this, how quickly that just devolved and imploded. And where there's chaos, there's always fraud, you know, and that's what we see. And I think what happened initially
00:28:09
Speaker
There's a lot of uncertainty. We saw this huge explosion in like trying to get domains that look like they were SVB. So you saw this, I think there was hundreds of requests to, to register domains. Some of them are for just opportunists that wanted to.
00:28:25
Speaker
you know, sell the sites to somebody else like a bail and tell it to attorneys like SVB bailout was one of them. But there was a lot of other ones that tried to make it look like they were like, SVB, get your money back. And, you know, all of these types of websites that were intended to lure victims in, you know, customers of SVB to log in and potentially fish their details. But there were other scams, BEC scams where
00:28:52
Speaker
Fraudsters were learning who were the customers of SVB and proactively saying, hey, you know, we've got to change pretending to be, you know, merchants or, you know, the bank.
00:29:05
Speaker
And saying reroute your, your payments now here, because they knew that all of these companies that were using SVP had to change their routing numbers with their invoicing and their payroll and all of that. So this is a rich target for these scammers because they knew that they could probably get a lot of money on, on this. And I think you had told me once that, you know, scams are.
00:29:31
Speaker
context, it's all around the context of the moment where you're going to be a victim. You can be very smart, you can be very knowledgeable, but in the right context, everyone can be a victim. And so these SVP customers were in that context of being really right victims. And so we saw a huge explosion in the EC temps against them. Yeah, the fallout of that is yet to be determined. We don't know yet what the amount, it might be greater than the fiasco itself.
00:29:59
Speaker
Yeah, absolutely. And it's not just SVB, right? It's Signature Bank. It's things like First Republic. And who else knows Credit Suite? It's just a fallout that's just going to keep going and going and going for a
Customer Trust and Reimbursement Issues
00:30:11
Speaker
while.
00:30:11
Speaker
One of the questions that I had and I wanted to ask you is, what do you think is going to be the impact of trust of financial institutions? We really see an exponential growth in scams. We see this discussion about liability. Today, customers don't necessarily know what the boundaries of liability are. They're used to being reimbursed when there's a fake check or
00:30:37
Speaker
When something erroneous happens in their account, eventually with some bureaucracy, it will be reimbursed. When it comes to scams, the landscape is different. The amount of scams is really growing. So what is the long-term trust concern that financial institutions might have when it comes to scams and their customers? Yeah, I think it's already starting. Think about fraud departments right now.
00:31:06
Speaker
A lot of customers don't want to answer calls from the fraud department anymore because they've been scammed by people saying they're from the fraud department. Our jobs, nobody actually completely trusts us anymore. We're supposed to be the protectors of the bank and protectors of the consumer, but the scammers have learned that there's a lot of trust there between the fraud department and the consumers because the fraud department is helping. That is just kind of an initial
00:31:36
Speaker
Look at the way I think people are going to interact with banks. I think when banks started, it was all about put your money there because you can trust that it's going to be safe. That's completely changed now because you put your money in a bank. You actually don't know anymore because somebody could steal all your money.
00:31:53
Speaker
drain your bank account and you may not get that money back because of a technicality or something that you couldn't get reimbursed for. So I think the trust thing is going to be maybe the main driver of why banks actually do something about it because people are not going to want to put their money in banks if it can be stolen.
00:32:12
Speaker
Wow. I haven't thought about what you said about the fraud department, and it's the same with banking personation scam, not necessarily a fraud department, but the whole class of scams that are impersonation, we talked about how it really distorts the reality, and you don't know if you're talking to the banking conversation, A, or in the call waiting, who is the bank, and that causes like a
00:32:36
Speaker
Loss of sense of truth what is the reality and that is associated with the bank and i i haven't connected that trust so much so that's really interesting and i've always thought about all those text messages that come from impersonated bank.
00:32:53
Speaker
is a concern from a brand abuse perspective, right? Because the customer thinks that they got a message from their bank, but it's not really from their bank, so the association, but it's more than that. It's a matter of trust and
00:33:08
Speaker
Yeah, it's a matter of trust. How are you going to, next time you call them to try to help them, they're not going to want to talk to you and they're going to be like, you can't be trusted. You know, I don't, I don't want to answer the phone. I'm not going to respond to you. And so the scams and the fraud will just run on their accounts. So banks are going to lose touch with customers. Right. So, so what, what do you think that needs to happen to drive real change?
Future of Fraud Prevention
00:33:35
Speaker
That's a good question. I've done a lot of consulting with banks in fraud and when they're in a massive problem, when fraud's going up, there's always only two things that
00:33:48
Speaker
that stop it. The first is real-time intervention, meaning you have to be able to, in a real-time mode, block a transaction from occurring. So it has to be a systematic real-time intervention. You can't catch it after the fact. You got to catch it while it's happening and stop it.
00:34:06
Speaker
And the second is typically some sort of technology that either blocks it from happening at all, so it just completely suppresses it, or stops the scammer or fraudsters from getting there in the first place, some technology. So if you think about what's really going to make a change, it's going to be some sort of blocking.
00:34:28
Speaker
and some sort of suppression, like being able to suppress text and suppress calls from even going out. I think those are going to drive, be the two biggest drivers of real change. And the third is going to be social media, getting involved and not sitting on the sideline, right? One in, I think in some countries, 70 to 80% of all scams initiate on social media. I think here in the US, it's about one in three.
00:34:54
Speaker
Social media has to get involved and has to do some sort of suppression, some sort of protecting consumers. The combination of those three things, and of course the banks in the ecosystem reimbursing, all that's going to probably be part of it.
00:35:10
Speaker
From a technology perspective, I think you got to have that intervention and that suppression to really stop it. Education is not enough. It's great, but it's not enough because of the context piece, right? Everybody can be a victim in the right context. Exactly. So with all that needs to happen, and you mentioned a lot of things and every one of the pillars of the four pillars that you mentioned are, there's a lot that has to go in there.
00:35:37
Speaker
And I really hope that social media will take charge and I think they have the ability and I'm wondering why they're not doing more. I know that they're doing a little bit. They're definitely suppressing a lot of junk, but they need to do more for sure. They get paid a lot of money for those advertisements and for those customers. So they're not incented to block them. They want the money.
00:36:03
Speaker
With the growing amount of scams, everything that we talked about today, technology that's created to support the scams, AI that's now been abused for scams, and a lot that needs to happen, I want to try and get an optimistic answer to the question, what are you hopeful about?
00:36:22
Speaker
I'm hopeful about, well, one of the things I'm really hopeful about, I see all these fraud fighters out there on their weekends. These people like you, like Karis Hendricks, like, you know, Ryan Davis and others who are actually spending their weekends fighting fraud and educating. And so I think that the number of people that are kind of dedicating their free time, you know, there's the noble, of course, like Ian Mitchell and
00:36:50
Speaker
and Miller and all these people that are getting involved to stop the problem. That gives me the most hope because there's an army of people. I think the Noble has something like 2,500 fraud fighters that are part of that now. That gives me a lot of hope that we've got the right people focusing on this and are passionate about it. That gives me a lot of hope. And then I think what also gives me a lot of hope is the banks are starting to really take notice.
00:37:17
Speaker
A few years ago, I was a fraud in this guy. I used to have to deny claims because people gave their passwords and their pin numbers out and things like that. So I know that that was the way that banks operated, but they're, they're shifting their mindset a bit. And those two things give me a lot of hope.
00:37:35
Speaker
That's great. It's great to hear about the shift in the mindset of financial institutions. And I agree, I had conversations a few months ago, even a few months ago, I'm talking about maybe eight or nine months ago with financial institutions that, you know, said, we're not even dealing with scams, we're not investigating, if they tell us that they did it, then we know we're not liable.
00:37:57
Speaker
And it's not everyone, right? There are a lot of financial institutions that always investigated and did try to help and did try to recover the money, but I definitely see a shift now where financial institutions are paying more attention and trying to help and even reimbursing at times. And I hope, hopefully that will grow and the investment will grow as you're saying, you've already started to see that change.
00:38:23
Speaker
Yeah, it's, it's great. It's the new, the new frontier. It's going to be a kind of a wild ride, but a fun one. I think it's going to, it's going to make it, it's going to be the most single, most challenging problem for fraud fighters to deal with the scams. It's a new world. It's it's, you can't rely on exactly everything that you did in the past. So you have to think, we have to think very creatively.
00:38:46
Speaker
Well, hopefully we'll see a lot of great technology advancements, a lot of thinking out of the box, and exciting technology that is used to leverage for the positive. Absolutely, yeah. I'm hoping the same. Well, it was a pleasure to have you on the podcast, Frank. Thank you so much and have a wonderful weekend. Yeah, I've really enjoyed it. Thank you for having me. I love what you're doing. Thank you so much for educating people on this and looking forward to catching up with you in the future on other topics.
00:39:14
Speaker
Yeah, sounds great. We'll definitely be happy to have you here again. Anytime. Thanks.
00:39:22
Speaker
I hope you enjoyed this episode. You can find a link to Frank on Fraud in the show notes. And if you got a message and you're not sure if it's a scam or not, you can validate it on a new website called scamranger.ai and also get advice on how to check the validity of the message. If you want to hear more about the recent evolution in online scams, follow me on LinkedIn or follow Scam Rangers, scam-rangers. Until the next time.