What were you doing on 26th December last year? Battling the queues in the post-Christmas sales? Sitting in traffic jams, commuting between relatives? Or were you one of the millions signing up for internet dating?
Around 3 million individuals registered for online dating in the month of January in the UK alone, according to Match.com. Amongst them will be opportunist fraudsters looking for your cash, not your love.
Many people are familiar with the term “419 fraud” – it refers to confidence fraud that occurs when the target is asked to send funds, often with the promise of being repaid. The stories used include: I need money for an operation, my relative is ill, we have large funds from a Prince that we need to transfer to you for a small processing fee. The purpose is the same: to make an individual part with their money.
Perpetrators of such fraud have predominantly represented themselves with poorly worded emails, littered with grammatical errors that give the game away, or addresses in Nigeria (419 is the section of Nigerian law dealing with this kind of fraud). As social networking has flourished, however, and individuals become more fraud-savvy, fraudsters are finding better ways to con people. By blending into social environments where individuals may be more inclined to part with funds, they are continuing to see a return on their investment.
Online dating sites provides a group of targets who may be more susceptible to being victims of this type of fraud, as they are in the right frame of mind: open, ready to make a connection, ready to trust. In some instances, an individual can be persuaded to part with money in exchange for a promise of a union, taking them that step closer to meeting the person they have been communicating with. After this point, many feel invested in the “relationship” and would part with more money in order to maintain it, rather than throw away what they have already contributed. (There’s an interesting paper on the Investment Model of relationships online.)
When the individual feels they are not receiving back what they are putting in, they may finally stop giving and communicating. They may also realize they have been duped, but few will report it, either because they’re embarrassed or because they do not realize they have been a victim of a larger fraud scam.
A 2011 study estimated around 200,000 citizens in the UK had fallen victim to this kind of fraud, losing more than £1 million, although only 592 reported the crime. In 2012, more than 5,600 cases were registered in the USA, with average losses of $8,900. While most people are aware of these sorts of scams, many look for the obvious signs such as poor grammar or a Nigerian location — however, an increasing number of scam artists live in the same country as their victims. In many instances they will even telephone their target, reinforcing the belief that the relationship is real.
So how can organizations reach out to their customers to protect them — and what does this have to do with banks? Leveraging intelligence across channels can enhance detection of suspicious activity that may indicate a customer has been a victim. For example, dating website subscriptions made using card payments can be linked with large bank transfers to new payees, or used to create a targeted mailing campaign warning customers of the current risks. FICO® Falcon® Fraud Manager gives banks and card issuers the capability to develop cross-channel strategies and rules, as well as use Hotlist functionality to black-list destination accounts. Additionally, FICO enables clients to develop cross-channel, targeted campaigns that can reach out to those individuals who may be at more risk than others.
Looking for love is hard enough. By being proactive, banks can make sure it’s not even harder on their customers’ finances.
Thanks to Rebecca James of Fair Isaac Advisors, FICO’s consultancy group, for this post.