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* People more vulnerable to socially-engineered scams
* Banks step up hiring, co-ordination to combat crime
* Pandemic fraud costing billions globally -analysts
By Sinead Cruise and Lawrence White
LONDON, Dec 10 (Reuters) - Fraud risk analyst Rajendran Raj
was used to the odd out-of-hours alert from authorities, but a
call one Saturday in March heralded a new era, of tackling
criminals seeking to cash in on coronavirus.
A French drugs firm had contacted Singapore police to report
the failed delivery of $10 million of Personal Protective
Equipment (PPE) from a supplier in the Asian financial hub, just
as demand for such supplies was rocketing.
Raj, a 30-year veteran of Standard Chartered,
traced the payment to a bank in Singapore and then to seven
others. Debit card payments then helped Raj's team track 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 and launching public
awareness campaigns, bankers and their advisors told Reuters.
"Prior to COVID-19 I would say I handled maybe 20 to 30 scam
cases per year, but during this period from March to now we have
handled several hundred," Raj said.
BAE Systems Applied Intelligence research suggests U.S.
insurance fraud, where scammers seek to dupe insurers on costs
incurred as a result of COVID-19 restrictions, has doubled in
2020, so far costing the industry $100 billion.
Dennis Toomey, BAE's global director for counter fraud
analytics says there has been a surge in "creative claims".
These range from car hire firms inflating the costs of
sanitising vehicles to policyholders logging multiple claims
with different insurers for the same cancelled trip.
"The conditions are perfect for creating a perfect storm ...
high motivation and low protection," Toomey said.
LOVE'S LABOUR'S LOST
New opportunities for fraudsters have opened up as the
COVID-19 pandemic has confined billions to their homes.
Impersonation frauds, where tricksters pretend to be
officials chasing unpaid bank charges, bills or fines by
telephone or email, rose by more than a fifth in Britain between
January and October, Barclays data shows.
Many customers have been isolated from support networks who
could help thwart scams that rely on 'social engineering' - the
creation of false trust between victim and criminal - and lead
to the transfer of cash or sensitive password information.
Toomey estimates that social engineering is used in a third
of all U.S. cyber breaches, with compromised emails accounting
for more than $1.2 billion in losses.
"Romance scams" rose by as much as 46% month-on-month from
September to October and extracted an average of 9,000 pounds
from lovelorn Britons, sources at Barclays said.
Such scams vary but often involve fraudsters creating
alluring but fake profiles on dating apps, stringing along
victims for weeks or months before asking for gifts or money.
Scammers have shifted from crudely written cash demands to
sophisticated campaigns, Elisabeth Carter, criminologist and
forensic linguist at the University of Roehampton, said.
British police launched a campaign in October warning online
daters to 'swipe left on romance fraud', after a 26% rise in
reports to Action Fraud.
ARMS RACE
But banks and law enforcement agencies are fighting back.
Britain's NatWest Group has recruited extra
specialists to help combat fraud, a source with knowledge of the
matter told Reuters, and brought in new technologies that help
in particular with spotting fraudulent loan applications.
This problem is especially acute in Britain, where up to 26
billion pounds in emergency 'Bounce-Back' lending 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
recommitted on Wednesday to a code of practice to reimburse
eligible victims of authorised push payment (APP) frauds.
APP scams trick customers into authorising payments to an
account that they believe belongs to a legitimate payee – but is
in fact controlled by a criminal. 207.8 million pounds was lost
to APP fraud in the first half of 2020, UK Finance data shows.
Jim Winters, head of fraud at Barclays UK said his bank was
investing millions of pounds annually in tools and platforms
which filtered transactions multiple times, to maximise chances
of catching fraud and minimise delays to genuine payments.
"We know fraudsters use quite sophisticated technology so we
have to match that. 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 co-ordinating more closely to help disrupt
fraudsters looking to exploit coronavirus, sources said.
Increased data sharing is also helping to streamline
Suspicious Activity Reports (SARs) to the authorities, who have
historically struggled to investigate financial crime.
Britain's National Crime Agency said it had received and
processed a record-breaking 573,085 SARs during 2019/20, a 20%
increase on the previous period.
($1 = 0.7478 pounds)
(Reporting by Sinead Cruise and Lawrence White; Additional
reporting by Iain Withers; Editing by Alexander Smith)
