Millions of pounds and euros are lost each year through fraudulent calls made to financial institutions' call centres.
In the UK, such companies lose £20 million a year, with the one in 700 calls recieved being fraudluent in 2015, compared to the one in 1,700 in the USA during the same period.
We spoke to Matt Peachey, VP & GM EMEA of Pindrop, providers of phone fraud detection technology to financial companies, about the growing problem and how it can be addressed.
1.How serious a problem is phone fraud for financial institutions?
MP: For financial institutions, fraud loss can be damaging – both in terms of cost and customer confidence. It’s a crime that has affected many institutions to the extent that fraud loss has evolved into an incurred cost that is considered somewhat inevitable.
Fraud on the telephone channel is a serious problem and is getting worse. Our 2016 State of Fraud Report found that financial institutions in the UK are losing £0.51 to fraud on every call. This means that large call centres, receiving an estimated 40 million calls per year, are losing an average of £20million each year to fraudsters.
The value of this fraud is staggering but what is more frightening is that this is only part of the picture. The hidden cost of fraud needs to be taken into account too. The impact this has on the customer experience can be far reaching, particularly if call centres are unable to quickly sort fraudulent from legitimate callers. Agents spend longer establishing identity before they are able to offer any assistance, which in turn can end up making genuine customers feel like criminals.
2. Why are call centres more vulnerable than other channels of communication to cyber criminals?
The drivers of this can be mostly attributed to the sophistication of security measures online and on the physical channel. If you think about how online security has matured in the last decade, this line of defence has grown stronger as attacks have become more sophisticated. Chip and Pin (EMV technology) is also a lot harder to dupe than it was 10 years ago.
This has led to fraudsters changing tact and seeking additional ways to commit this type of attack. Combined with the increase in data breaches that subsequently widens the availability of personal data via the dark web, fraudsters have been driven to attack the weakest line of defence – the call centre.
3. How can you prevent callers disguised as customers from ringing up and mining the information they need?
The best way to reduce any type fraud is to make it harder for criminals to commit their crimes. Just look at EMV fraud. This is much more prevalent in the US than the UK as the technology is newer and so defences are less sophisticated. According to the Aite Group, these attacks grew 79% in the UK in the years following the Chip and Pin rollout (2005 to 2008) but are now much lower. Improved call centre defences will have a similar impact, reducing the number of fraudsters attempting to attack banks through that channel.
Current techniques deployed by mainstream banks do not do enough here. Voice biometrics are a step in the right direction but financial institutions need a multi layered approach to help them spot fraudsters instantaneously.
4. What advice would you give to financial institutions to help tackle the problem of fraud?
What we need to remember is that call centre agents aren't fraud experts. They are tasked with providing genuine customers with a great experience and as such are being targeted by criminals. By equipping agents with solutions to better identify a suspicious call quickly, banks can prevent the pre-fraud data gathering activities that can happen over the phone that subsequently leads to increased fraud across the phone and other channels.
To really tackle the problem at hand, financial institutions need to start implementing solutions that monitor and detect phone fraud. This requires multi-layered solutions that quickly and accurately detect it. Implementing IVR anti-fraud technology helps to do this by offering comprehensive call centre fraud detection on all calls. It analyses multiple layers of caller information and creates a risk score to help identify risky or suspicious callers, giving financial institutions a new way to defend against fraudsters and help reps do their jobs.
5. How does Pindrop’s solution work? Can you be sure of detecting criminal call activity?
Our patented Phoneprinting technology analyses 147 factors of call audio to uniquely identify the calling device, geography, and other information that indicates a suspicious caller. Combined, this aids in detecting fraudulent activity before it becomes an issue.
Financial institutions need to integrate this type of capability to track fraud attempts in the moment and across multiple channels and flag accounts that have suspicious activity, quickly. By putting the right authentication and fraud detection in place, banks can circumvent attempts by fraudsters to dupe businesses across all their channels while detecting and cutting criminal activity.