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OCC Head: ‘Tried-and-True Scams’ Remain Common in Financial Fraud

Biden, banking, crypto, Wall Street, Watchdog, Comptroller of the Currency

Banks can help combat fraud targeting consumers by verifying the accuracy of transactions, educating the public, and maintaining strong controls and fraud monitoring capabilities, Acting Comptroller of the Currency Michael J. Hsu said.

Speaking Wednesday (July 10) during the Financial Literacy and Education Commission’s Public Meeting, Hsu said that while artificial intelligence and other new technologies are being used in frauds, “tried-and-true scams” remain common. Hsu’s written remarks were released by the Office of the Comptroller of the Currency (OCC).

“Often the fraudster poses as a trusted business, government agency or even a bank employee, who asks the victim to wire money to a fake account right away,” Hsu said. “In most cases, once the wire transfer is complete, the funds cannot be retrieved.”

In cases like that, confirmation of wiring instructions, verification of identity and effective authentication controls can stop the effort to wire funds to the bad actor, Hsu said.

Banks can also educate their customers about trending scams and how to avoid them. Hsu highlighted text messaging and bank impostor scams, noting that banks could inform consumers about the strengths and weaknesses of authentication methods.

Hsu said financial institutions can also enable frictions that cause consumers to pause before making payments to unknown parties; train staff to identify and assist customers who are attempting to make unusual transactions; and maintain strong controls and verifications throughout customers’ banking relationships.

He added that these institutions can also ensure open lines of communication between their departments that research unusual activities; file Suspicious Activity Reports in a timely manner; promptly identify, investigate and resolve fraud concerns; and offer personal discussions with staff when customers suspect they have been defrauded.

“Prioritizing fraud prevention is not just about protecting a bank’s bottom line,” Hsu said in his written remarks. “Consumers who have confidence that their bank is trying to protect them from bad actors will have greater trust in that financial institution.”

The PYMNTS Intelligence report “Leveraging AI and ML to Thwart Scammers” found that scammers disguised as trusted service providers or promising monetary gain are the most likely to trick consumers. Nearly two-thirds of financial institutions reported tech support scams, utility company scams and IRS impostor scams.

In another move, the OCC said in April that it was asking financial institutions for their help in “improving the financial capability and financial health of their customers” by delivering financial literacy education to consumers.