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3 Ways to Partner with Customers to Fight Holiday Fraud

  • by Becki LaPorte
  • Dec 10, 2019

How to Keep Scammers from Robbing the Holiday Mood and More

The holiday season brings us many joys: delightful presents, special meals, family traditions and friendly reunions. But the season is also becoming known for a not-so-pleasant surprise—an uptick in the already troublesome issue of cyber and financial fraud.

Financial institutions pay the price for such fraud, in more ways than one. Not only do they foot the bill for installing fraud detection tools, they eat the dollars lost to fraud and sometimes even lose customers who blame them for breaches or hacks related to their products or services.

As Business Insider reports, “fraud is top of mind for consumers going into the holiday season.” So, in addition to using artificial intelligence, biometrics and behavioral analytics to combat fraud this time of year, don’t forget about the greatest non-technical tool in your defensive arsenal: customer communications. 

In fact, it’s time for some frank conversations with your customers.

Tackle the Elephant in the Room

Holiday get-togethers may not be the place to address delicate issues with family members, but the holidays are the ideal time for financial institutions to tackle the thorny issue of fraud with their customers. Financial crimes—cyber and physical—occur year-round, but between Thanksgiving and New Year’s they tend to spike.

Forbes explains why: Financial criminals “take advantage of new credit card activity, overlooked bank statements and all the other typical holiday distractions.” But consumers are not the only distracted ones. The holidays are prime vacation time for bank staff members, leaving institutions short-handed at the very time they face more transactions and more fraud attempts. 

Therefore, it takes a concerted effort between institutions and their customers to fight this holiday scourge. Enlist customer help by making them aware of the most popular scams in order to ensure that amid the holiday revelry or stress, they don’t fall victim to the con:

  • Charity scams: Everyone is in a giving mood over the holidays, as many want to share their bounty with those less fortunate. Regrettably, scammers know this and seek to exploit it. “Fake charities are among the most popular holiday scams, soliciting consumers over the phone, email and through direct mail.” In addition, consumers should beware of bogus crowdfunding pleas that pull on heartstrings. These proliferate during the holidays, so exhort your customers to investigate the legitimacy of anyone asking for donations and encourage them to stick with well-known charities or causes.
  • Too-good-to-be-true deals: Unbelievable shopping and travel deals flood Inboxes and social media feeds throughout the holiday season. Caution your customers to be wary, even when offers appear to be from reputable businesses. Criminals are adept at creating fake lookalike websites, which lead to non-delivery of items paid for, stolen credit card information and/or malware on consumer devices.
  • Package delivery scams: The Better Business Bureau warns that this type of scam prevails during the busy holiday shopping season. Such schemes seek to gain the recipient’s personal information or to download malware. Before taking any requested action, consumers should attempt to confirm the legitimacy of email or paper notices about delivery issues or missed deliveries. Suggest that they contact the delivery company directly to ask about the status of expected packages.
  • Gift card fraud: Hackers target gift cards in multiple ways:
    • Tampering with them in stores so they can be accessed by hackers once bought by shoppers.
    • Selling tampered gift cards via online marketplaces in order to launder the money.
    • Hacking into online gift card accounts to steal their value or the account holder’s information.
  • Stolen reward points: Over the last 10 years, criminals have perfected a crime that may surprise your customers: stealing reward points from credit card and other accounts.
  • Emotional scams: Finally, warn customers about cons that play on their emotions, i.e., fake contest alerts, bogus “Dear Santa” and “Name-a-Star” schemes and, of course, romance scams.

Raise Customer Awareness of their Surroundings

Financial criminals have certainly taken full advantage of cyberspace to commit fraud. But your customers need to realize that traditional forms of physical fraud and theft still occur. This is especially true during the holidays because fraudsters can count on the following:

  • More people: Whether it’s visiting family, friends or neighbors dropping by, party guests or delivery drivers, more people are going in and out of consumers’ homes this time of year. It only takes one unscrupulous visitor to steal valuables, personally identifiable information or financial account records.
  • More travel: Spending the holidays away from home leaves unoccupied houses susceptible to theft, and travelers more exposed to card fraud in route to and while at their destination.
  • More stress and distraction: Normal activities like work or household chores don’t stop for the holidays. When you add shopping, gift wrapping, additional cooking and traveling to the mix, consumers tend to let their guard down. Remind customers not to leave purses, wallets or devices unattended or account information in view of others, even if only for a moment. Criminals are waiting to pounce.

Urge Customers to Actively Participate in Fraud Prevention

It’s also important to arm customers with ways that they can actively safeguard themselves against fraud. Sharing these valuable tips will, in turn, also help protect your institution and ultimately its reputation.

  • Check bank accounts: Remind customers that online and mobile banking make it possible for them to monitor their bank and credit card accounts anytime in between statements, which is a wise thing to do. The quicker they report suspicious activity or unrecognized transactions, the sooner the fraud can be stopped and the customer can be made whole.
  • Stick with known entities Whether it is shopping online or making a charitable donation, the safest bet is with reputable organizations and causes. If your customers want to expand beyond that circle, suggest that they do some digging to confirm the legitimacy of lesser-known businesses or charities before sending them any money or credit card information.
  • Chip over swipe: According to a recent report by Visa, approximately 80 percent of U.S. merchants now have chip card readers, and for those businesses, EMV technology has reduced point-of-sale fraud by 87 percent. Make sure your customers know that their cards are far less likely to be hacked when they dip their chip instead of swiping their card.
  • Private, not public: Help customers understand that it is not safe to conduct online shopping or banking when on public Wi-Fi. The only way to ensure that hackers aren’t eavesdropping on your activity—and pilfering your credit card or personal information in the process—is to use password-encrypted private Wi-Fi or a virtual private network.
  • Don’t take a pass: When consumers use weak passwords, their accounts are vulnerable. Worse yet, if they use the same password for multiple accounts, they are exponentially at risk. Explain to your customers the importance of using a strong and unique password for each account.
  • Get notified Your customers can also take the proactive step of using available card technology to protect themselves. This includes taking full advantage of On/Off card features, always recording travel plans with banks and card issuers and setting up card purchase notification features for both debit and credit cards.
  • Avoid prying eyes: Finally, caution your customers to always keep personally identifying information and financial records safe from prying eyes, both online and in person. This includes accessing accounts in public places like coffee shops and airports.

Your Institution’s End of the Bargain 

Like most difficult conversations, it will likely take more than one attempt for your customers to truly absorb the fraud prevention message. Therefore, it is worth the time and effort to use all communication vehicles at your institution’s disposal: statement inserts, website messages, social media posts, texts, emails and in-person interactions. And the messaging doesn’t have to end with the holidays. Routine cybersecurity dialogue throughout the year benefits everyone.

Internally, now is a good time to check your fraud prevention tools and processes to make sure they are in good working order and nothing has inadvertently fallen through the cracks. The uptick in activity that occurs this time of year also allows you to assess their effectiveness and make plans for adjustments in the coming year.

In addition, take a good look at staff scheduling, especially for front-end, customer service and fraud areas. These are the positions most likely to see attempted fraud and to interact with customers in the event of such fraud. Remember, financial criminals are counting on your institution being short-staffed and overwhelmed by the increase in bank transactions, giving them an opening that otherwise might not exist.

It is possible to turn the unwanted surprise back on scammers and fraudsters. Empower your institution, its staff and customers to stand on the front line together to stop fraud in its tracks this holiday season.

Becki LaPorte serves as compliance director for CSI’s Regulatory Compliance Group. She has over 20 years of experience in the financial services industry, including compliance, conducting investigations, developing and delivering comprehensive training, and consulting on program development and implementation. Becki is CAMS and CFCS certified.