Jul 9, 2024   SOURCE: PR NewsWire

Financial Institutions Struggle to Meet Customer Expectations in Fighting Authorized Transfer Scams, LexisNexis Risk Solutions Study Finds

    --  Only 50% of organizations have confidence in their ability to stop
        scammers.
    --  Sixty-nine percent (69%) find it difficult to break a victim's belief or
        trust in a scammer.
    --  Just four percent (4%) of FIs can alert customers to scams involving
        impersonation of financial services employees within 24 hours.

ATLANTA, July 9, 2024 /PRNewswire/ -- LexisNexis® Risk Solutions published a study evaluating how financial institutions (FIs) detect and mitigate authorized transfer scams, where fraudsters manipulate or deceive account holders to transfer funds to them.

The study, Defend Against Authorized Transfer Scams, finds that fraud risk and mitigation strategy leaders at US financial services institutions understand the importance of both detecting and mitigating scams effectively. However, they exhibit lower confidence in their organizations' capabilities and solutions for these efforts. While 81% of FIs prioritize mitigating more scams to prevent customer financial loss, only 50% feel confident in their ability to do so.

Fraudsters are highly skilled at coaching targets to complete authorized transfer scams. They manipulate or deceive targets into transferring funds to them through various means, such as the false sale of goods, services or investments. They also use fraudulent payment instructions and impersonation schemes, including posing as romantic interests, fake businesses, charities, family or friends.

"Scams, fraud and financial vulnerability are on the increase. Meanwhile, consumers increasingly expect safer and more secure interactions and transactions," said Soudamini Modak, director of fraud and identity at LexisNexis Risk Solutions. "FIs must analyze digital and behavioral signals to implement better strategies for mitigating scams across multiple channels. It's important FIs detect scams and other fraudulent behavior without frustrating consumers by slowing legitimate transactions and risking customers abandoning their transactions."

Key Findings from the Study: 

    --  Consumers hesitate to believe they are the target of a scam. Sixty-nine
        percent (69%) reported that convincing customers that they are the
        target of a scam is difficult. Many organizations (72%) are trying to
        strike a balance between confidently proving to a target that they are
        being scammed and not divulging too much information.
    --  Alerting customers in a timely manner once some scams are detected poses
        a challenge. Twenty-eight percent (28%) of FIs flag scams involving
        illegitimate orders for goods, services or investments to customers
        within 24 hours. However, only four percent of FIs can alert customers
        to scams involving the impersonation of financial services employees in
        the same time period.
    --  Current capabilities and solutions are not enough to mitigate scams. Two
        in three (64%) of respondents reported challenges with their current
        solutions' ability to mitigate authorized transfer scams. This
        generation of scams and scammers requires additional systems for
        detection and the adoption of advanced technologies that use data-based
        insights to assess payor and payee risk, determine if outreach is
        necessary and attempt to mitigate a scam before it concludes.
    --  Detecting target coaching, malicious transfers and mitigating scams
        requires a comprehensive strategy. FIs are taking a multilayered
        approach to scam detection and mitigation and aligning upgraded
        capabilities with their overall goals for scam detection strategy. Sixty
        percent (60%) of FIs that aim to enable more confident outreach to
        customers understand that it is an essential part of effective scam
        mitigation. Expanding automation and implementing solutions to detect
        risky behaviors gives FIs the confidence to identify a consumer as the
        target in a scam.

Download the Defend Against Authorized Transfer Scams study.

Methodology

LexisNexis Risk Solutions commissioned Forrester Consulting to conduct an online survey of 413 financial services directors and decision-makers at organizations in the US to evaluate fraud risk and mitigation strategies. Survey participants included decision-makers in IT, operations, fraud prevention, customer service, digital banking and product management. Questions provided to the participants focused on the current state and benefits of fraud mitigation strategies, as well as the current state and challenges of fraud risk. The study began and was completed in September 2023.

About LexisNexis Risk Solutions

LexisNexis® Risk Solutions harnesses the power of data, sophisticated analytics platforms and technology solutions to provide insights that help businesses across multiple industries and governmental entities reduce risk and improve decisions to benefit people around the globe. Headquartered in metro Atlanta, Georgia, we have offices throughout the world and are part of RELX (LSE: REL/NYSE: RELX), a global provider of information-based analytics and decision tools for professional and business customers. For more information, please visit LexisNexis Risk Solutions and RELX.

Media Contact:
Ade O'Connor
+44 78 9091 8264
ade.o'connor@lexisnexisrisk.com

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SOURCE LexisNexis Risk Solutions