ABA: Fighting bank scammers requires a collaborative effort

Banks have been on the frontlines of innovation and deploying advanced capabilities to protect their customers, but the fight against scammers is one that banks cannot win on their own, American Banker Association EVP Paul Benda told the Senate Banking Committee during a hearing today on bank scams. In his testimony, Benda noted that even as banks continue to invest in cybersecurity and fraud prevention, criminals are growing more sophisticated, using new advanced deepfake technologies to change their voice and appearance in real-time video calls to execute romance and impersonation scams.

“Our members know that fraud takes a financial and emotional toll on their customers, and banks are making extraordinary efforts to protect and safeguard customer accounts as fraud has become more sophisticated,” Benda said. “Unfortunately, however, the fight against these criminals is one that the banking industry cannot win on its own. We believe that a unified, cooperative effort between banks, law enforcement, regulators and other stakeholders offers us the best chance to fight back against fraud and protect consumers.”

Banks need telecom companies and their regulators to close regulatory loopholes that allow criminals to spoof legitimate names and phone numbers to convince customers they are speaking with a bank, Benda said. They need social media companies to proactively root out accounts pretending to be bank employees or financial advisors to convince people to put their money into their investment scams. Banks also need the U.S. Postal Service to improve the security of the mail system so that when someone mails a check, it won’t get intercepted, stolen, altered and cashed by the criminal, he said.

Benda called for increasing consumer education on preventing fraud, pointing to efforts such as ABA’s anti-phishing campaign, #BanksNeverAskThat. He called for more information sharing between banks and the public sector. He also suggested improving collaboration with law enforcement and regulators, noting that law enforcement plays a critical role in stopping fraud and ensuring perpetrators are prosecuted.

Securing mail key to fighting check fraud

Check fraud is a major problem affecting many Americans, with scammers turning to new resources to perpetrate the crime, Benda said. The recent rise in check fraud has shown that the mail system isn’t as secure as we thought, with mail theft growing and assaults on mail carriers a major problem, he said.

“What this allows criminals to do is gain access to these checks,” Benda said. “And the marketplace today allows them access to tools they wouldn’t even dream of 20 years ago. They can access chemicals to wash these checks. They can access card stock from overseas suppliers so they can print checks that look exactly alike. Frankly, it is a very challenging fight for [banks]to stop these trends unless we can start securing the mail.”

Benda noted that ABA recently entered into a partnership with the U.S. Postal Inspection Service to educate consumers about the problem. At the same time, committee Chairman Sen. Sherrod Brown (D-Ohio) and Ranking Member Sen. Tim Scott (R-S.C.) noted that ABA has launched a Check Fraud Claim Directory, which provides contact information for banks needing to file a check warranty breach claim with another financial institution.

“It seems ABA is working around the clock to figure out ways to protect consumers and help financial institutions ensure this sort of fraud won’t happen again,” Scott said.