Fraud warnings need to be effective and right now, they are anything but. Despite strong measures being taken by banks, customers are struggling to protect themselves against scams, and even experienced users are still falling foul of bad actors. In a recent survey, we found that consumers do take responsibility for protecting themselves online, but only 50% of them feel that preventing fraud is simply a matter of common sense. The majority also still see their bank as being responsible for keeping them safe.
An uphill struggle
That’s easier said than done. Fraudsters are ruthless and will use any and every approach or technique to execute their scams. With social engineering increasingly part of the equation, customers are being coerced into making fraudulent transactions (that appear on the surface to be legitimate) themselves. Preventing scams has become very difficult.
This means that detection forms only one line of defence – education also plays a vital role, making the customer aware of the scams and the risks that they present, as well as how and when to take action to protect themselves. Currently, education generally takes the form of warning messages that are presented to the customer.
But those messages are falling on deaf ears. They usually appear at fixed points in the user journey, such as when a customer logs in, or when they initiate a transfer. Wherever they appear, the common ground is that these warnings are inherently passive – they seldom actually intervene in the flow. As such, they’re often easily ignored, which has a drastic impact on their efficacy.
Looking without seeing
The result is that complacency becomes a factor. If customers are seeing the same message in the same place at the same time, they’re likely to attach less, if any, importance to it. And indeed, as many as 58% in our survey said that they couldn’t remember seeing any warning messages or if they had, they disregarded them.
Also, these messages are generally seen when customers are in a 'cold state', meaning when they’re not actively at risk. They may read the message and make a note of it, but that all changes when they are at risk and when a scam is happening. In this 'hot state', stress takes over, and they are liable to forget the warnings.
It’s not that customers are unwilling to protect themselves, the majority believe that they have a degree of responsibility to do just that. But it’s hard to know when you’re being scammed in the heat of the moment.
Tackling the learning curve
It’s understood that education has a role to play, but how can we ensure that customers get educated, and stay educated? That boils down to friction, language, and data.
Adding friction to a customer journey might seem like a bad idea, but if customers only see fraud messages when they’re at a point of high risk (when they’re in a hot state rather than a cold state), that friction is far more likely to have an impact.
That 'good friction' can also be delivered in the form of a nudge. Giving a customer a message that gives them a good reason not to do something is an effective way to make them question the validity of completing a new or unfamiliar transaction.
How messages are conveyed is also critical. Many people think that the warnings from their banks are not clear. Different age demographic groups express distinct preferences for the language used, and the amount of detail conveyed in the messages.
That demographic information isn’t the only important data. Data about a transaction in progress can help spot a customer who’s being defrauded. Anomalies like one-handed typing or delays in clicking through an online form could suggest that a fraudster may be on the phone to the customer, trying to socially engineer them into making a money transfer. If a threat is identified, mechanisms can be engaged to alert the customer at the right time.
Timing is everything
It’s clear, therefore, that a one-size-fits-all approach isn’t the answer. Callsign’s Dynamic Interventions solution ensures that messages are tailored to the customer and delivered at exactly the right moment. Not only will this help to stop scams moving forward, but warning the customer when in a hot state, also increases the likelihood that the message is understood.
Customers don’t want to be scammed and 94% want businesses to be proactive and deliver warnings when there’s danger. There is an appetite for education, but successfully satisfying it means catering for the customers’ needs.
You can find out more about our Dynamic Interventions solution as well as insights and guidance from leading behavioural scientists on how you can utilise friction, language and data in your fraud prevention strategies.
Download it now to learn more about how the right messages can keep the wrong people at bay: programs.callsign.com/dynamic-interventions
This editorial was first published in our Financial Crime and Fraud Report 2021 - How to Fight Fraud and Master KYC, Onboarding & Digital ID, which provides a comprehensive overview of the major trends driving growth in fraud prevention, identity management, digital onboarding and KYC, transaction monitoring, financial crime compliance, regtech, and more.
About Amir Nooriala
Amir Nooriala is the Chief Strategy Officer (CSO) at Callsign, responsible for the customer and partner strategy alongside sales. Previously Amir has held roles including CSO and COO at OakNorth, Ops and Tech MD at BGC and has also worked at Barclays Investment Bank, Accenture, and Cisco Systems.
About Callsign
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now