Banks Outmaneuver Fraudsters by Beefing Up Human Intelligence

The payments landscape is more sophisticated than ever, but so are fraudsters.

With financial institutions (FIs) deploying artificial intelligence (AI), machine learning (ML) and other cutting-edge technologies to secure transactions, cybercriminals are increasingly finding that the easiest way in is through the weakest link: people.

A new Fraud and Financial Crimes report from PYMNTS Intelligence reveals that, from social engineering to insider threats, the human element can often be the most vulnerable yet potentially under-addressed aspect of the scam landscape.

The report data found that approximately 30% of U.S. consumers — roughly 77 million individuals — have fallen victim to financial scams in the past five years, with losses often exceeding $500 and, in many cases, much more. Scammers have adopted strategies akin to those used by legitimate businesses, such as segmenting their “market” and personalizing their “offers” to align with the specific fears, aspirations or daily habits of their targets.

As fraud tactics evolve, FIs are in turn prioritizing educating their customers alongside digital defenses. By fortifying employees, customers and partners against manipulation and error, institutions can work to better neutralize many of the human-level threats that deploying technology alone cannot.

Read more: New Report Examines the Slick New Face of Digital Fraud

The Human Factor in Fraud Is a Persistent Weakness

Phishing, vishing, business email compromise (BEC) and other social engineering attacks rely on psychological manipulation rather than technological vulnerabilities. Criminals no longer need to crack complex encryption algorithms or breach fortified systems; instead, they trick individuals. Even the most advanced fraud detection models struggle to identify threats that originate from genuine user actions.

The report found that by posing as representatives from financial institutions, technical support or government agencies, scammers are able to establish credibility and lower the defenses of potential victims, gaining trust quickly. ​

For example, scammers posing as trusted entities such as employers are particularly effective in job listing scams. Eighty-six percent of victims reported that the scammer used this tactic. Similarly, 83% of debt collection scam victims reported that scammers pretended to be a trusted entity.

If fraudsters are targeting people, then financial institutions can in turn play a proactive role in protecting them from scams. By understanding the tailored strategies scammers use, FIs can implement more effective measures to safeguard their customers while prioritizing security strategies that fortify human awareness, behavior and decision-making.

See also: Behavioral Analytics Inject ‘Smart Friction’ Into Battle Against Scams and Payments Fraud

Live phishing simulations, gamified security challenges and adaptive learning platforms can each teach employees and customers to recognize and resist social engineering attempts. Training can also incorporate emerging threats such as deepfake fraud, which uses AI-generated synthetic voices and images to impersonate individuals in positions of authority.

AI-driven chatbots, real-time fraud alerts and personalized security insights can also help in educating FI customers around ways to potentially identify and avoid scams. For example, before completing a high-risk transfer or initiating a new irrevocable payment, a system can display a targeted warning message based on real-world scam tactics.

Questions regarding whether customers want to proceed with transactions and whether they truly “know” recipients can keep individuals safe from an “urgency trap” that scammers love to set, pressuring would-be victims to hurry up and send money or account details, Gasan Awad, senior vice president of enterprise fraud product management at PNC, told PYMNTS.

Partnering with other financial entities and law enforcement agencies can also facilitate the sharing of information about emerging scam trends, ultimately enhancing the overall defense against fraud.

Through continuous education, advanced technological defenses and collaborative efforts, the financial industry can better protect consumers from falling victim to these deceptive schemes.​ By making the human element a priority, financial institutions can turn their weakest link into a formidable line of defense against ever-evolving threats.

Read the report: How Scammers Tailor Financial Scams to Individual Consumer Vulnerabilities