Preventing Romance Fraud: How Banks Can Protect Customers

By: Jamie Melling, CEO — Smartnumbers

A surge in romance scams has seen fraudsters swindle Brits out of an average of £8,650, with the number of reported scams increasing by 16% over the last year, according to the latest data from Lloyds Bank.

Victims of romance fraud are often duped into transferring money to fraudster accounts or handing over their bank details. In the world of easy mobile banking, it’s possible to transfer money at the touch of a button from anywhere in the world. The challenge is that the ability to make payment decisions in a matter of seconds is extremely convenient for both customers and fraudsters. But how do these romance scams work – and how can banks keep themselves and their customers safe?

The spectre of romance fraud

Romance fraud is a type of authorised push payment (APP) fraud, where fraudsters convince the victim to authorise and transfer payment over themselves.

In a romance scam, a fraudster feigns romantic interest in their victim to manipulate them into sending them money or buying expensive items on their behalf. These scammers build a relationship with their victims over time, before claiming they need money for an emergency, travel or any other reason that plays on their victim’s emotional attachment.

And even if money isn’t sent directly, fraudsters can use any personal details they’ve gained to pose as the customer and manipulate their bank’s call centre. This gives them access to more information, passing any knowledge-based authentication checks and eventually getting access to their victim’s account and finances.

Unfortunately, with many APP fraud cases, it can be difficult to recoup the money that’s been sent to fraudsters. According to UK Finance, in all reported cases of APP fraud last year, just £73.1 million of the £207.8 million lost was refunded. This can be devastating for individuals. And with more people falling for these scams – it’s up to banks to do more to prevent them and protect their customers.

What banks can do to prevent romance fraud

For banks, protecting customers and preventing fraud should be a top priority. When it comes to romance fraud and other APP scams, taking a proactive approach to prevention is often the best way to mitigate risk and stop fraudsters in their tracks. Here are a few ways that banks can help protect their customers.

1. Provide scam warnings and interventions

Scam warnings and interventions can be placed into online banking and mobile apps, prompting customers to rethink. Even a simple pop-up prompt can slow down the process and stand in the way of impulsive decisions. The goal is to encourage customers to think twice before transferring money to suspicious accounts.

2. Educate customers on risks

Another way of limiting the number of fraud cases is to educate customers, build risk awareness and advise them on how to avoid common scams. It’s important to remind customers to never reveal security details, double-check contact information for the recipient bank and be cautious when sending money to someone they haven’t met in person. This helps prevent customers being so easily duped.

3. Training for contact centre agents

Behavioural manipulation is one of the most common ways that fraudsters get the information they need to convince banks and customers they’re legitimate. After harvesting personal information through social media or the dark web, they then manipulate contact centre agents into validating the information they have or even divulging more. Training agents on these tactics so they can recognise and avoid the trap is a crucial way of reducing fraud.

4. Use technology to stop fraud at its source

Another effective way of stopping romance fraud is to limit the amount of personal information that’s harvested through interactive voice recognition (IVR) systems. Currently, fraudsters can use bots to bypass the IVR, validating the information they have by bypassing security checks. With the right technology, you can identify and stop suspicious callers before they even connect.

Keep your customers safe from APP scams

With the right training, education and technology – romance fraud can be beaten. Preventing IVR reconnaissance can quickly stop fraudsters in their tracks and also gives banks a chance to follow up with customers and get to the root of the issue before it happens again.

Romance scams are one of the fastest growing scams. They’re successful because fraudsters are incredibly skilled at preying on people’s emotions – and getting the information they need to seem legitimate.

To stop this, you need a multi-pronged approach, combining education, awareness and the right fraud prevention tools so you can successfully identify and stop fraudsters before they can cause harm.

Romance fraud is on the rise: How can banks protect their customers?