Expert Tips to Avoid Fraud for Banks and Consumers This Holiday Season

By: CK Leo, FICO's lead for fraud, security, and financial crime in Asia Pacific 

It's no secret that holiday shopping is a boom for retail, and the prominence of double-digit sales like 12.12 continues to be one of the best opportunities for consumers to find a big bargain in Asia. Given the current state of the economy – coupled with inflation and the concomitant price increase we’re seeing on nearly all products and services – consumers are going to be hunting harder this year. More and more, these shopping activities are happening online, and just as we are eager to see huge price drops in our favorite shopping items, fraudsters also see this as a great opportunity to lure undiscerning shoppers during this period. 

Specifically this holiday sale season, we anticipate that real-time payment fraud will increasingly become a common ploy. With real-time payment fraud, customers might be asked to pay using money orders, wire transfers, or account-to-account payment – when they send money through this payment mode, they’ll unlikely get it back. As the cash is transferred nearly instantly, victims don’t have a window of time to reverse the payment once they realize they have been deceived by an illegitimate business or fake website. Fraudsters proceed to swiftly launder the money through a maze of accounts, making it hard to trace. 

These schemes are often executed by taking advantage of people’s tendency to click on what may look like an attractive deal for highly sought-after goods or fake delivery notifications with a phishing link. Given the boom in e-commerce thanks to the pandemic, shoppers aren’t just purchasing off long-established, secure sites, but often making purchases from smaller online retailers for the first time. To facilitate these holiday online shopping scams, fraudsters often lure consumers onto a site via social media – usually for items that are high in demand like electronics or limited-edition fashion, sneakers, and luxury goods – and trick their targets into transacting outside of the e-commerce platform. However, the items may be counterfeit products, or worse, they don’t arrive at all. 

To avoid falling prey to schemes, consumers should take preventative measures to protect themselves against festive fraud. For instance, they should be selective and shop on official websites or mobile apps where possible. When making purchases on third-party platforms, it’s always a good idea to cross-reference with official sources if a deal seems too good to be true. If they suspect a fraudulent charge, the bank should be informed immediately. Consumers should also be mindful when receiving scam text messages with links to bonanza sales or even emails masquerading as recently purchased receipts. They need to do their due diligence and verify that the offer is from an official source before clicking on any links and be discerning about small discrepancies such as counterfeit links which mimic official websites. 

However, even with the best precautions, savvy consumers are still vulnerable to being exploited. Financial institutions have an added responsibility to their customers and a role to play in taking a proactive stance in mitigating consumers’ risks. Banks should engage in customer education on the safe use of payment cards and digital banking credentials will be valuable. There are also new advances in artificial intelligence models that can help spot uncharacteristic spending behavior or significant transactions that may be unauthorized. It’s also important to have intelligent two-way communication with customers that can reach them via any channel whether it’s SMS, email, phone call, or via an app alert. This builds trust with the consumer that the bank is able to help prevent likely fraud and is involving them in confirming what is legitimate and what might be a scam. 

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