(International Fraud Awareness Week) — A new study of 12,000 consumers across 14 countries by global analytics software leader FICO has underscored the need for banks to strike a better balance between customer satisfaction and fraud mitigation as real-time payments (RTP) surge in popularity. In the survey, 26% percent of UK consumers said that they have reported actual or suspected scam losses to their bank.

More information: https://www.fico.com/en/latest-thinking/ebook/2024-scams-impact-survey-uk

About three-quarters of consumers in the UK say they have sent (79%) and received (73%) RTP and more than a quarter (28%) plan to increase their RTP usage in the next 12 months. However, RTP-related scams, such as Authorised Push Payment (APP) fraud, are following in the shadows. In addition to the quarter of Brits who say they have reported losses, an alarming 41% of respondents said their friends or family members have been scammed. 70% say they have received a text, email or call that was part of a scam.

“The need to stop scams has never been more urgent,” said Matt Cox, vice president and general manager for FICO in EMEA. “In our study, more than half of UK consumers want their banks to deploy better fraud detection systems. And the stakes have been raised by the new rules that came into force last month, from the Payment Systems Regulator and the Bank of England. Both sending and receiving institutions must reimburse APP fraud victims in most cases.”

Key findings:

• More than a quarter of consumers (26%) say they’ve reported losses from a scam to their bank
• 54% of consumers say they believe they should be responsible if they fell for a scam; nearly a third blame either the sending bank (19%) or the receiving bank (13%)
• 73% of consumers thought banks should refund scam victims always (31%) or most of the time (42%)
• 58% of consumers ranked having better fraud detection systems as the most or second-most impactful action that banks can take to protect them from scams
• Nearly two-thirds of consumers say they would complain to their bank and 23% to regulators if they are unhappy with how a scam incident is handled.

Taking Steps to Stop Scams

Unscrupulous criminals will go to great lengths to con bank customers, often socially engineering personal information from their victims to commit APP fraud. Yet, according to the FICO research, over half of consumers (54%) feel they are responsible if they fall for a scam; only 9% blame the scammer. Add to this the fact that 73% of consumers in the UK think banks should refund scam victims most of the time or always, and the potential reputational and cost fallout from APP fraud is massive.

“Financial institutions should focus on mitigating fraud at the front end. They play a crucial role in identifying and intervening in scam transactions,” Cox said. “It’s vital that consumers remain confident enough to take advantage of the benefits of real-time payments, such as immediate transfers and instant funds availability.”

As RTP usage continues to soar, consumers expect their banks to equip them with the tools, education, and automated fail-safes to help prevent scam losses. “One of the most fundamental ways banks can help to prevent losses is by knowing how their customers want the bank to communicate with them,” Cox said. “The good news is that more UK consumers prefer to receive sensitive communications through their bank’s app than any other method (37%). As banking apps provide a much more secure channel for communications and transactions than text messages or emails, they can be a key channel for banks to help consumers fight scams. But no one channel is right for every customer, and banks should be able to select the most effective channel for each person.”

Cox cited the need for fraud detection capabilities such as data ingestion across multiple sources with behavioural profiling to provide rich context about RTP transactions, applying sophisticated analytic techniques capable of detecting suspicious transactions, and automating decisioning to determine the best course of treatment or level of intervention.

“By automating fraud detection at scale, banks can really help to defend their customers’ interests, protect their own bottom line and importantly, build greater trust in the all-important customer relationship,” Cox said.

A new solution from FICO and Jersey Telecom (JT) received the Anti-Fraud Solution award at the Credit & Collections Technology Awards on November 7 in Manchester. The FICO® Customer Communications Service Scam Signal uses telephony signals to detect potential scams.

About FICO

FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 200 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, insurance, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 80 countries do everything from protecting 4 billion payment cards from fraud, to improving financial inclusion, to increasing supply chain resiliency. The FICO® Score, used by 90% of top US lenders, is the standard measure of consumer credit risk in the US and has been made available in over 40 other countries, improving risk management, credit access and transparency.

Learn more at https://www.fico.com

FICO is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.

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