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Dynamics of telephone fraud
Transcript of Dynamics of telephone fraud
Timeline and Dynamics of Telephone Fraud in Lithuania
Telephone fraudsters start targeting banks' customers in the middle of 2010
Obviously, fleecing unemployed people isn't very profitable; therefore, in the middle of 2011 fraudsters change their baiting script and start impersonating law enforcement agents
The incidence of telephone fraud really takes off throughout 2012
Initially, the potential victims are jobseekers who post ads with contact details etc online / newspapers; the fraudsters bait them posing as potential employers.
Now fraudsters call random victims and use persuasion and intimidation techniques in order to obtain victims' e-banking login details.
Total incidents - 97
Total loss - 428 000,00 LTL
(this includes 144 000,00 LTL in pay day loans
Average loss per customer - 4 411,00 LTL
Further increase of telephone fraud during three quarters of 2013
Total incidents - 221
Total loss - 1 154 728,00 LTL (this includes 213 634,00 LTL in pay day loans)
Average loss per customer - 5 895,00 LTL
Total of mule accounts - 266
Police statistics (2012):
Total telephone fraud incidents - 816
Total loss - 2 782 000,00 LTL
Cost of police investigations ~ 1,2 million LTL
Confiscated phones from inmates - 7 884
According to the police, telephone fraud is perpetrated by organized criminal groups in prisons
Implications for the banking industry
The most prominent telephone fraud incident
Are you aware that your bank account is being used by organized criminals and corrupt bank staff to launder illegally obtained funds ...?!?
"Corn cannons" (and, occationally, radio controlled hobbyist drones) are used to launch mobile phones and pre-paid SIM cards into the prison's territory. Additionally, the role of corrupt prison staff shouldn't be disregarded.
Source: Lrytas.lt, 15th May, 2013
Average account mule is 28 years old, unemployed, often a recipient of state benefits and knows that what he/she is doing is illegal...
If they succeed, customer's funds are immediately transferred to the accounts controlled by the criminals. In addition, fraudsters often obtain pay day loans in the victim's name.
Press "Play" to watch "corn cannons" in action
Victims are often labeled as "gullible" or "plain stupid", but the previous example demonstrates that anyone is vulnerable to a persuasive approach at one time or another.
Victims not only suffer a financial loss, but also a loss of self esteem because they blame themselves for having been so "stupid".
Train staff so they could identify customers who are at higher risk and provide adequate advise on risk mitigation (e.g. PIN generator versus static passwords, transaction limits, SMS alerts, etc).
Raise awareness through a sustained communication campaign warning customers about telephone fraudsters and other financial crime risks.
How banks could effectively counter this phenomenon?
Finally, share experience and exchange information about the account mules within the industry and with other stakeholders (e.g. law enforcement).
If the current trend of telephone fraud is not reversed, this might result in:
the incidence of telephone fraud will continue to increase and affect more customers
this can result in subsequent intervention of the Central Bank
fraudsters will start targeting other banking products and channels or invent more elaborate financial crime schemes
fraudsters will start targeting SMEs
some customers might refrain from using e-banking product and this might have some impact on the long term plans of the bank
How on earth could she fall for that?!?
If in doubt...
Examples of telephone fraud from around the world
Tелефонные мошенники (Russia)
"Ore Ore" Sagi (Japan)
Voice phishing fraud (Korea)
Virtual kidnapping scam (Mexico)
Courier fraud (United Kingdom)
Jamaican Lottery fraud (USA)
Houston, we have a problem ...
Am I in trouble?
Grandparents scam (Canada)
I'm afraid you are, unless you co-operate and tell me your e-banking passwords since we need to block the account...
Yeah, that's right, just hang up on telephone fraud!
Even MPs are vulnerable...
Meet the chap who pulled it off...
Average age - 54 years
Gender of victims
94 per cent
6 per cent
93 per cent
7 per cent
Average age - 56 years
Limited range of potential victims
Requires physical contact with the victims
Difficult to recruit couriers
Everyone's a target
No physical contact
Abundance of money mules
Hacking banks' customers by phone
This scam is known as "It's me, mother/grandmother!" telephone fraud
In summary, current efforts clearly lack structure,
co-ordination and consistency.
Telephone fraud statistics 2012
Telephone fraud statistics 2013 (three quarters)
A fool and his money are soon parted!!!
2012 (3 quarters)
2013 (3 quarters)
360 489,00 LTL
1 154 728,00 LTL
Welcome to Alytus, the capital of telephone fraudsters!
Metoda Accidentul (Romania)