Fighting the Covid vultures

By rotide
Created 10/06/2021 - 08:30
Business vulture.jpeg

By Yishay Trif, CEO at Moneynetint [1]

Crisis can bring the best out of humans, but it also gives the wicked an opportunity to thrive. The pandemic is no exception. So although many of us have reacted to this unprecedented situation by helping in any way we can, as evidenced by the huge rise in volunteering [2] since Covid-19 started sweeping the world, the vultures are circling. 

The coronavirus has provided ample opportunity for fraudsters to target the vulnerable, for example by posing as trusted organisations like HMRC or the NHS. But what makes these criminals so uniquely cruel is the fact that they take advantage of the fact that the pandemic has significantly lowered our defences. Fraudsters can make fools out of smart people, taking advantage of a moment's poor judgement. At times of great uncertainty, when people feel nervous, overwhelmed or stressed, they are much more likely to make mistakes that let fraudsters flourish.

In normal times, businesses work hard to combat online crime, but given the huge spike in fraud during the pandemic [3], every organisation needs to be aware of the rising risks, and redouble their efforts to protect themselves and their customers.  

Regulators take action

The fight against fraud is eternal, but figures from the UK's Financial Conduct Authority (FCA) illustrate the alarming surge in the last year. In February, the FCA published the findings of its October 2020 Covid-19 panel survey [4], which found that over one third of adult respondents received at least one pandemic-related phishing scam, while 12 percent of vulnerable customers paid the money - compared with just 1 percent of those judged not to be vulnerable. Worryingly, the survey judged over half (53 percent) of adults to display a characteristic of vulnerability.

But the good news is that regulators around the world are fully aware of the rise in criminal behaviour and are beginning to take effective action. Earlier this year, the FCA published new guidance [5] for firms to help them treat vulnerable customers more fairly and to protect them from fraud and financial abuse.

According to the FCA, firms should consider actions to empower consumers to manage their finances and protect themselves from scams when they are in a vulnerable position, including by using digital services and information technology to block certain types of expenditure or payments involving large amounts.

What's especially welcome about the new guidance is that the FCA recognises that different customers will have varying levels of vulnerability. Firms should therefore take particular care to ensure that everyone is treated fairly, and take steps to ensure that staff, products and services meet these needs. 

Additionally, businesses should take into consideration how to meet consumer needs in relation to third-party access to their accounts or to support them and assess whether to allow a consumer to proceed if they suspect fraud or diminished ability to understand a product or service.

As the guidance notes, reducing the impact of fraud isn't just a case of adopting new measures, important as this is. It's equally important that businesses embed the fair treatment of vulnerable customers within the organisational culture, policies and processes throughout the whole customer journey. 

The financial world never stands still, and the explosion of fintech companies and new ways of managing and transferring money means regulators and financial services providers must collaborate closely to develop new industry best practices. This is critical to combating fraud effectively, of course, but it's also important to give businesses and other users peace of mind, enabling them to choose partners that have shown themselves committed to fighting fraud and other financial risks. At MoneyNetint, we work with regulators like the FCA, for example by inviting them to review our internal processes, policies and procedures to identify whether we can make any improvements.

While the onus is on financial services providers like MoneyNetint to achieve compliance and develop codes of conduct for the industry [6], there is plenty that ordinary businesses can do to combat fraud and protect themselves - and their customers - from the shameless criminals who try to cash in on a global crisis.

Fighting the fraudsters 

Criminals are often ingenious and resourceful in the way they trick people out of their savings, but really it's a numbers game. To flip the old police adage on its head, fraudsters only need to get lucky once or twice, while customers need to be aware of the risks at all times.

So while we can't eliminate fraud entirely, especially not at a time when people's resilience has been lowered by the stresses of the pandemic, businesses can help make life significantly harder for the scammers and protect as many customers as possible. Here are our top five tips for taking meaningful action today.

1.             Ensure that you're always monitoring national regulators and crime agencies such as the FCA or National Crime Agency for their most recent guidance and news on developing threats, and put processes and workflows in place that enable you to act quickly and effectively when new guidance is issued.

2.             Build a culture of compliance throughout the whole organisation. While every business should have a dedicated compliance officer, at times of heightened risk it's especially important to ensure that this knowledge does not remain siloed in the compliance department. Instead, review your employees' awareness of the latest fraud risks, and foster a culture of constant education and training, especially for customer-facing employees.

3.             Develop customer education programmes that alert them to the latest risks, especially those that pertain to your industry and market. Consider creating regular fraud briefings for customers demonstrating that you're on top of the latest threats, and providing reminders on how to spot potential scams 

3.             Review your business processes to adapt procedures to the new levels of risk. For example, implement enhanced fraud risk assessment during customer onboarding to find out who might be more vulnerable, and adjust the rules and requirements (such as more documentation or heightened transaction monitoring) based on this assessment.

3.             Actively ask customers for examples of scams that they have seen, review and report them to relevant crime agencies and financial regulators. Businesses have an important role to play in combating fraud: they should not be passive or reactive, but take active steps to identify fraudulent activity and share insight, data and best practices. 

While the pandemic may bring the worst out of some people, it's also an opportunity to show the best of your business. By taking effective steps to help protect customers against fraud, every organisation can help strengthen the bonds of trust with their customers, with the rewards being even greater loyalty when life finally returns to normal.



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