The ABCs of Financial Crime: Consumer Education is the First Line of Defense
Criminals have been challenging the banking and digital payments space for decades. As the financial services industry began offering safeguards like EMV chips, 3Dsecure, and biometrics, at Early Warning we've seen criminals pivot to new strategies, leveraging their technology know-how and preying on the weakest link of all -- human nature.
Thanks to social media and many other channels, it is now easier than ever to tailor crimes to appeal to consumer emotions. Tapping into feelings like pity, fear, greed, and even love – are all tools financial criminals have employed to steal upward of 8 billion dollars in 2022, according to the FTC.
Financial Criminals Are Growing More Devious
Consumers must know the most frequent schemes criminals employ: 'pay yourself' scams, pig butchering, and catfishing.
In 'pay yourself' scams, a criminal sends a text or call impersonating your bank or credit union. They offer to stop the fraud and ask that you send money -- often urgently -- to your own phone number or email address, which they claim is now linked to your new bank account. They will often request your OTP (one-time passcode) to authorize the payment and then open a new account they own with your credentials and redirect your money right into their pocket.
Pig butchering is an elaborate operation that ensnares innocent victims in a web of deceit with the promise of incredible returns from bogus investments. The criminals build an online relationship with victims, which can sometimes start as a sham romance and evolve into an investment scam. Typically, criminals casually mention their massive wealth derived from investments to get the victim interested, and victims often make their initial investments to maintain this newfound relationship. After a few cycles, the criminals go for 'the whole hog' – i.e., all your retirement savings.
Catfishing is a similar scheme with the added promise of a romantic relationship. Money changes hands from the victim to the criminal over time, with increasing frequency and in higher amounts. Learn more about catfishing from Nev Schulman, who coined the term in his 2010 film based on his own experience, and who partnered with Zelle® in the past to produce a series of TikTok and Instagram PSAs on the topic.
Education is the First Defense Against Financial Criminals
While there isn't a silver bullet that can eliminate the threat of financial criminals in one fell swoop, we at Early Warning believe that multiple layers of defense are the best way to protect consumers – and education is that critical first line. Indeed, research from FINRA indicates that when people are aware of a specific scam, they are 80% less likely to engage with it, and if they do engage, are 40% less likely to lose money or sensitive information.
Our Zelle® consumer education efforts started over five years ago with a partnership promoting financial literacy with high school students. Over the years, our efforts evolved to include additional partnerships to reach broader audiences and expand resources on our website within the Financial Education Center.
We've also worked on several award-winning "edutainment" style campaigns, including the recently launched S.A.F.E. Squad, a mock detective show produced in partnership with Vox Media. The edutainment format allows us to educate viewers about scams in a compelling but relatable manner.
To Fight Fraudsters, the Industry Must Continue to Partner Together
We've also educated millions of consumers of all ages through partnerships with the Better Business Bureau, the National Council on Aging, the Cybercrime Support Network, and HerCampus Media. We also provide turnkey educational materials to financial institutions to educate their customers and members. Importantly, we are also educating consumers right in their mobile banking app – displaying repeated alerts that remind hundreds of millions of consumers per year about safety when they need it most.
At Early Warning, fighting fraud and scams is deeply etched into our DNA as a 30+ year payments partner of the U.S. financial service ecosystem.
But we cannot fight the battle against financial criminals alone. To reach consumers, we need to continue to come together as an industry and invest in targeted educational efforts that reach them where they are: from coffee shops to their homes and dorm rooms to phones and laptops.
Spreading the message and removing the stigma around scams is the only way to fight back against scammers where it matters most – in the hearts and minds of Americans