How to Partner with Customers to Fight Fraud

by Matt Herren

The holiday season brings us many joys: delightful presents, special meals, family traditions, new beginnings and more. But the season also is becoming known for a not-so-pleasant surprise—an uptick in the already troublesome issue of financial fraud.

Financial institutions pay the price for such fraud, in more ways than one. Not only do they foot the bill for installing fraud detection tools, but they also eat the dollars lost to fraud and sometimes even lose customers who blame them for breaches or hacks related to their products or services.

In addition to using artificial intelligence, biometrics, behavioral analytics, and other tools to combat fraud this time of year, don’t forget about the greatest non-technical tool in your defensive arsenal: customer communications.

Current Holiday Fraud Scams

The holidays are the ideal time for financial institutions to tackle the thorny issue of fraud with their customers. Financial crimes—cyber and physical—occur year-round, but between Thanksgiving and New Year’s, they tend to spike.

Financial criminals take advantage of increased credit card activity and busy consumers. To exacerbate this issue, the holidays are prime vacation time for bank staff members, leaving institutions short-handed at the very time they face more transactions and more fraud attempts.

Therefore, it takes a concerted effort between institutions and their customers to fight this holiday scourge. Make customers aware of the most popular scams to ensure they don’t fall victim to the con:

Charity scams: From fake charities to bogus crowdfunding, please, exhort your customers to investigate the legitimacy of anyone asking for donations and encourage them to stick with well-known charities or causes.

Too-good-to-be-true deals: Consumers are bombarded with emails and social media posts about unbelievable shopping and travel deals throughout the holiday season. Caution your customers to be wary, as criminals are adept at creating fake lookalike websites, which lead to non-delivery of items paid for, stolen credit card information, and/or malware on consumer devices.

Package delivery scams: The Better Business Bureau warns that this type of scam prevails during the busy holiday shopping season. Fraudsters will send phishing texts or emails posing as delivery notices with fake—and malicious—tracking links. Such schemes seek to gain the recipient’s personal information or incite them to download malware. Before taking any requested action, consumers should attempt to confirm the legitimacy of texts, emails, or paper notices about delivery issues or missed deliveries.

Gift card fraud: Hackers target gift cards by tampering with them in stores or coercing victims to pay for items with pre-paid gift cards. Encourage customers to always purchase gift cards from trusted stores and exercise caution if a seller pressures them to make a payment via gift card.

Encouraging Customers to Actively Participate in Fraud Prevention

Arm customers with ways that they can actively safeguard themselves against fraud during the holiday season and beyond. Sharing these valuable tips also will, in turn, help protect your institution and its reputation.

Check bank accounts: Remind customers that digital banking makes it possible for them to monitor their bank and credit card accounts at any time between statements, which is a wise thing to do. The quicker they report suspicious activity or unrecognized transactions, the sooner the fraud can be stopped.

Chip over swipe: According to a report by Visa, over 80% of U.S. merchants now have chip card readers, and for those businesses, EMV technology has reduced point-of-sale fraud by 87%. In fact, nearly 80% of all card present transactions in the U.S. from July 2020 through July 2021 were chip-based. Make sure your customers know that their cards are far less likely to be hacked when they dip their chip instead of swiping their card. Additionally, contactless payments—which offer consumers the opportunity to tap or hover their card over a terminal’s contactless symbol—are just as secure as inserting an EMV card.

Private, not public: Help customers understand that it is not safe to conduct online shopping or banking when on public Wi-Fi. The only way to ensure that hackers are not eavesdropping on your activity—and pilfering your credit card or personal information in the process—is to use password-encrypted private Wi-Fi or a virtual private network

Do not take a pass: When consumers use weak passwords, their accounts are vulnerable. Worse yet, if they use the same password for multiple accounts, they are exponentially at risk. Explain to your customers the importance of using a strong and unique password for each account and utilizing multi-factor authentication for important accounts whenever available.

Get notified: Your customers also can take the proactive step of using available card technology to protect themselves. This includes taking full advantage of On/Off card features and setting up card purchase notification features for both debit and credit cards.

Partnering with Customers to Fight Fraud in 2023

Since fraud can have far-reaching effects, it is worth the time and effort to use all communication vehicles at your institution’s disposal to prevent it including statement and website messages, social media posts, texts, emails, and inperson interactions.

And the messaging does not have to end when the new year begins. Routine cybersecurity dialogue throughout the year benefits everyone. Download CSI’s white paper to learn more about how you can mitigate risk for your institution, its staff, and customers during the holiday season and beyond by prioritizing cybersecurity education.

About the author Matt Herren is the Director of Payment Strategy at CSI. With a strong focus on emerging technologies and how they apply to the financial industry, Matt has led CSI’s effort to drive innovation in the payment space. In his role, Matt has worked to enhance customer experience and helped direct innovative product offerings to increase bank profitability, allowing banks to realize industry-leading results and maximize program performance.