Paul Forni

Online scams are a threat to bank customers throughout the year, but are prevalent during the holiday season. Exacerbating the problem this year are fraudulent appeals, designed to elicit an emotional response to provide financial aid to those impacted by recent regional and world events.

Banks, whenever possible, work to make customers whole after they fall victim to fraudulent activity. However, by providing customers with tools and knowledge banks can help them protect private information and avoid cybercrime.

To minimize losses – both from a financial and human resources perspective – it is crucial that banks work diligently to proactively educate customers about the warning signs and implications of cybercriminal activity. It’s a holiday gift that keeps on giving – both ways.

Alert Early and Often

First and foremost, bank information security personnel need to fully engage the institution’s marketing department to assume a leading customer-facing role in the anti-fraud education effort.

Priorities need to include frequent postings and alerts – on the bank’s website, social media channels and customer direct marketing and newsletter –to inform customers of cybercrime threats and recent reports of fraudulent activity in the area.

This information must be written to be easily understood by bank customers of all ages and devoid of excessive technical jargon. It should also be reviewed and updated on a regular basis for accuracy and relevancy.

Bank leaders and information security personnel should also take advantage of every opportunity to get out into the community to meet with civic organizations, senior groups and other stakeholders to provide cybercrime protection seminars and answer questions. Don’t limit these meetings to bank customers, but consider your bank’s information security subject matter experts to be a community resource, because, after all, nobody – customer or not – should become a victim of fraud.

The Federal Trade Commission (FTC) is also an important tool in a financial institution’s anti-scam education toolbox. The government agency, which has a mission to protect the public from deceptive or unfair business practices, reported that consumers lost nearly $8.8 billion to fraud in 2022, and increase of 30 percent over the previous year.

What a Scam Really Looks Like

It reported the most common fraudulent activities were imposter scams whereby cybercriminals reaching customers via call, text or email convincing them they were someone in authority, online shopping scams, prizes/sweepstakes/lotteries, false investment reports and bogus job opportunities.

A scam does not have to be elaborate to fool someone, and warning signs are usually easy to spot. These include pressure to act immediately, claims of a problem with a government agency such as the Internal Revenue Service, and requesting unusual forms of payment such as gift cards.

To avoid scams, banks must inform customers of important steps to take to avoid a potential financial loss, including authenticating who they are really dealing with. If the caller claims to be from the IRS, then get off the call and dial an IRS office directly.

And, most importantly, never offer personal or financial information for a request that was unexpected or not initiated by the customer, and never feel pressured into acting immediately.

FTC Offers Tools to Help

To bolster a bank’s anti-scam education efforts, the FTC offers a range of publications that can be shipped to a bank in bulk and free of charge. A recent check of the FTC website yielded 88 scam education publications – available in several languages – with titles such as “gift card scams,” “money wiring scams” and “romance scams.” Order the FTC publications most relevant to your customer base and have them visible and easily accessible at branch locations and bank-sponsored events.

And, most importantly, develop strong relationships with law enforcement agencies including local police departments (for consumer scams and check washing), the Federal Bureau of Investigation (for ransomware attacks) and the U.S. Secret Service (for counterfeit activity). Law enforcement, especially local police departments, can provide invaluable assistance to notify the community of scams by using the many communications vehicles at their disposal to provide alerts.

“Community banks are on the frontlines of discovering, identifying and reporting online fraud,” Yarmouth Police Department Chief Kevin Lennon told me. “When banks work closely together with local law enforcement, we are often able to act quickly to alert unsuspecting residents and prevent them from falling victim to cybercriminals.”

Remember, when it comes to information security a human firewall is just as important – if not more important – as a technical firewall. Don’t let the cybercriminal “grinches” take the joy away from your customers’ holiday celebration.

Paul Forni is the information security and red flag officer for The Cooperative Bank of Cape Cod.