From romance scams to phantom PPE, banks fight crimewave coronavirus

LONDON (Reuters) – Fraud risk analyst Rajendran Raj was used to strange after-hours alerts from authorities, but a call on a Saturday in March heralded a new era in fighting criminals looking to cash in on the coronavirus. .

A photo of Fraud Risk Analyst Rajendran Raj’s brochure in Singapore September 17, 2020. September 17, 2020. Chillangeresubrahmanyam Ramesh / Brochure via REUTERS THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY. MANDATORY CREDIT. NO RESALES. NO FILES.

A French pharmaceutical company had contacted Singapore police to report the failed delivery of $ 10 million worth of personal protective equipment (PPE) from a supplier in the Asian financial center, just as the demand for such supplies were skyrocketing.

Raj, a 30-year veteran of Standard Chartered, traced the payment to a bank in Singapore and then to seven others. The debit card payments helped Raj’s team trace the alleged perpetrator to Hong Kong, leading to his arrest.

Such pandemic-related scams mean banks are hiring more staff to prevent and detect fraudulent transactions, forging closer ties with local and global law enforcement agencies and launching public awareness campaigns, the bankers and their advisers told Reuters.

“Before COVID-19, I would say I was handling 20-30 scam cases per year, but during this period from March until now we have handled several hundred,” Raj said.

Research from BAE Systems Applied Intelligence suggests that insurance fraud in the US, where scammers seek to mislead insurers with costs incurred as a result of COVID-19 restrictions, has doubled in 2020, and so far it has cost the industry $ 100 billion.

Dennis Toomey, BAE’s global director of anti-fraud analysis, says there has been an increase in “creative claims.”

These range from car rental companies that inflate vehicle disinfection costs to policyholders who file multiple claims with different insurers for the same canceled trip.

“The conditions are perfect to create a perfect storm … high motivation and little protection,” said Toomey.


New opportunities have opened up for scammers as the COVID-19 pandemic has confined billions to their homes.

Phishing scams, in which fraudsters pretend to be officials pursuing unpaid bank charges, bills or fines over the phone or email, increased by more than a fifth in Britain between January and October, data shows from Barclays.

Many customers have been isolated from support networks that could help thwart scams that are based on “social engineering”, creating a false trust between victim and offender, and leading to money transfers in cash or confidential password information.

Toomey estimates that social engineering is used in one-third of all US cyber breaches, and compromised emails account for more than $ 1.2 billion in losses.

“Romance scams” rose as much as 46% month-on-month from September to October and extracted an average of 9,000 pounds from British lovers, sources at Barclays said.

Such scams vary, but often involve scammers creating attractive but fake profiles on dating apps, and accompanying victims for weeks or months before asking for gifts or money.

Scammers have gone from crudely written cash demands to sophisticated campaigns, said Elisabeth Carter, a criminologist and forensic linguist at the University of Roehampton.

British police launched a campaign in October warning online daters to ‘swipe left on romance fraud’, after a 26% spike in Action Fraud reports.


But the banks and law enforcement agencies are fighting back.

Britain’s NatWest group has hired additional specialists to help fight fraud, a source with knowledge of the matter told Reuters, and has come up with new technologies that help in particular to detect fraudulent loan applications.

This problem is especially acute in Britain, where up to £ 26bn in ‘recoverable’ emergency loans to small businesses may never be repaid due to fraud or insolvency, the National Audit Office estimated in October.

Seven British banks, including HSBC, Lloyds and Metro Bank, as well as NatWest and Barclays, re-committed on Wednesday to a code of practice to reimburse eligible victims of authorized automatic payment (APP) fraud.

App scams trick customers into authorizing payments to an account that they believe belongs to a legitimate beneficiary, but is in fact controlled by a criminal. £ 207.8 million was lost to app fraud in the first half of 2020, data from UK Finance shows.

Jim Winters, head of fraud at Barclays UK, said his bank was investing millions of pounds annually in tools and platforms that leaked transactions multiple times, to maximize the chances of detecting fraud and minimizing delays in genuine payments.

“We know that scammers use fairly sophisticated technology, so we have to match it. They are well funded and they know what they are doing. It’s a cliché but it’s an arms race, ”he said.

Global banks have also stepped up communications with authorities and are coordinating more closely to help disrupt scammers looking to exploit the coronavirus, sources said.

Increased data sharing is also helping to simplify suspicious activity reporting (SAR) for authorities, who have historically struggled to investigate financial crimes.

Britain’s National Crime Agency said it had received and processed a record 573,085 SARs during 2019/20, a 20% increase over the previous period.

($ 1 = 0.7478 pounds)

Reporting by Sinead Cruise and Lawrence White; Additional reporting by Iain Withers; Alexander Smith Editing

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