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AI-powered localised scams on the rise, banking fraud trend takes off
Fri, 29th Mar 2024

BioCatch, an international specialist in digital-fraud detection and financial-crime prevention, has released a new report that highlights banking-fraud and financial-crime trends in Europe. The report warns that fraudsters are increasingly harnessing Artificial Intelligence (AI) to generate localised and personalised scams, skirting bank defences and targeting a wider victim demographic.

In the words of Tom Peacock, BioCatch's Director of Global Fraud Intelligence, "While we're at the dawn of the age of AI-powered fraud, this is not a scourge of tomorrow or some distant future. It's happening right now and banks need to protect themselves and their customers." He further explained that fraudsters were deploying AI to devise tailored videos, voice recordings, emails and text messages to bypass bank security and address a broader audience.

The UK emerged as an anomaly in the EMEA Report as voice scams, prevalent throughout the rest of the continent, dropped by 25% from the previous year. The report suggests this trend may indicate that fraudsters are desperately circumventing modern fraud-protection controls such as behavioural biometric intelligence. Account-takeover (ATO) has gained momentum in the UK since 2023, rising by 13% with hackers frequently logging into their victims' accounts without making fraudulent transactions, in an attempt to garner trust with the financial institution before carrying out the actual theft.

The UK has also become the pioneering European country to both introduce mandatory reimbursement for fraud victims and divide the liability between sending and receiving banks. This policy change has led to a significant increase in the exposure of 'mule accounts' in the country during the last year.

Paul Davis, BioCatch Regional Vice President, emphasised the importance of identifying and dismantling mule accounts, referring to them as the "timeless tool ubiquitous to every scam since the outset of online banking." If neutralised, these accounts can significantly reduce digital fraud and financial crime throughout Europe and globally.

The report also highlighted additional trends in fraud across Europe:

  • 75% of observed fraud instances occurred on mobile devices, marking a 6% increase from 2022.
  • Reported stolen-device cases rose by 43% in the region with a significant percentage originating from the UK and Spain.
  • BioCatch's Mule Account Detection solution recognised over 10,000 suspect accounts among its European customers.
  • As banks escalate their digital security to comply with evolving regulations aimed at protecting fraud victims, fraudsters have been forced to shift their strategies leading to a surge in social engineering scams across the continent.

The increasing prevalence of scams and the exploitation of AI to dupe individuals and drain their finances is a cause for concern, according to Dr Nicola Harding, CEO of We Fight Fraud (WFF). She expressed relief at partnering with BioCatch to raise awareness of these emerging threats as part of WFF's April Fraud campaign. The campaign will run throughout April, May, and June.