Growing concerns over credit sector fraud and scams

Reports indicate that the rise of technology-driven scams has left many unsuspecting victims reeling from monetary losses and diminished trust in legitimate communication sources.

A case study highlights the experience of an unnamed individual who fell victim to a sophisticated scam in July 2023. During a phone call from an individual claiming to be from Microsoft, the victim was informed that their computer had been compromised by malware and needed urgent assistance. 

The caller, using a professional and reassuring tone, convinced the victim to grant remote access to their computer. This initial mistake became the gateway for the perpetrator to execute a series of fraudulent transactions.

“I had no reason not to believe her,” the victim noted, reflecting on the trust placed in the scammer. Once access was granted, the victim was shown what appeared to be malware infections on their system. 

In the course of this interaction, the fraudster suggested a three-year protection plan for £149, presenting what seemed to be a reasonable solution to a purportedly critical situation. When the payment was declined, the scammer urged the victim to use an app for international money transfers, a recommendation that further compromised the victim’s financial security.

Ultimately, a staggering £4,000 was stolen through multiple transactions directed towards individuals in Kenya. Upon discovering the fraud, the victim contacted their bank and Microsoft, only to learn that legitimate companies do not engage in such unsolicited calls.

According to research conducted by Uswitch, the UK faces significant challenges with online and mobile scams. 

The findings reveal that 68% of individuals are targeted by business impersonation scams, while 57% encounter bank impersonation scams and 50% face investment scams. Particularly alarming is the fact that individuals over the age of 65 receive an average of 295 suspicious or cold calls annually.

Following the incident, the victim reported the fraud to both the police and their bank and took steps to cancel their cards. 

The reimbursement process proved to be lengthy and arduous, with some credit card companies providing swift refunds while others required significant follow-up efforts. In total, the victim was able to recover most of the stolen funds, though a £210 charge remained unreimbursed.

Reflecting on the lasting impact of the scam, the victim expressed feelings of betrayal and unease. The experience altered their perception of communication, leading to increased caution with unknown callers and messages. 

“Whenever I pick up the phone, I am generally more cautious, especially if it’s someone I don’t know,” they explained.

This incident serves as a noteworthy example of the challenges posed by financial crime within the credit sector. The implementation of robust anti-money laundering (AML) directives, alongside Know Your Customer (KYC) and Customer Due Diligence (CDD) processes, has become increasingly critical to combatting fraud. 

Financial institutions are now more reliant on technological solutions that can assist in the detection and prevention of fraudulent activities, which ultimately impacts overall credit risk.

This is just one of a number of topics discussed at this year’s Credit Week, to find out more and book you’re tickets click here.