The Criminal Element

LIMRA: How COVID-19 Brought an Increase in Fraud in Financial Services

Professional criminals use the chaos caused by the pandemic to launch fraud attacks

LIMRA survey of ­financial services companies identified trends in fraudulent activity, as well as efforts to combat it through education and other preventive measures

6/15/2020 — As the unprecedented situation surrounding the pandemic continues to unfold, it is clear that professional criminals have recognized an opportunity. They are exploiting the chaos, anxiety, and uncertainty inherent in today’s reality—and they have recently intensified their attempts.

A recent LIMRA survey of ­financial services companies identified trends in fraudulent activity, as well as efforts to combat it through education and other preventive measures. Fraud attacks are on the rise; within the last 60 days, 42% of responding companies have experienced an increase in overall fraudulent activity. In addition, 47% have seen an increase in account takeover (ATO) attacks. More than ever, criminals are taking advantage of pandemic-driven vulnerability.

Goal Is Always The Same: Access Personal Information

“Examples might include fraudulent emails with claims of a vaccine or an offer to provide personal protection equipment,” said Russ Anderson, fraud program and technology manager, LL Global. “The goal of these emails is to get access to customers’ personal financial information.”

Examples might include fraudulent emails with claims of a vaccine or an offer to provide personal protection equipment, the goal of these emails is to get access to customers’ personal financial information...

Companies are adjusting to new operating procedures and effectively managing fraud risk in the new work-from-home business environment. Initially, 66% of companies expected the shift to remote work to increase their fraud exposure. After adjusting to their new operating models, only 39% of companies believe the shift to remote work has increased their fraud exposure.

Training Is Key to Combatting Fraud

Almost all respondents have stepped up fraud awareness training for the home offi­ce and field agents.

  • 97% have provided additional fraud education to call center and back offi­ce employees.
  • 63% have taken additional measures to educate advisors and fi­eld staff.

The heightened fraud risk represents a way for companies to protect customers and add value. In the last 60 days, 4 in 10 companies have provided or made available fraud prevention educational materials to customers.

“Since most account compromises begin with the customer’s personal computer, email or other accounts, having fraud-aware customers can be the best protection,” Anderson said. “Providing regular fraud awareness training and education to advisors and fi­eld staff can go a long way towards protecting client data and accounts.”

 

 

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