Financial fraud during the global pandemic

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The COVID-19 pandemic is unprecedented in many ways for our lifetime. We are seeing its impact on individual lives, governments and the global economy.

While cities and countries are scrambling to contain the virus and protect their citizens, they are also watching global markets decline at a breakneck speed.

However, we are seeing a sharp increase in the number of accrual and attempted frauds and scams seeking to take advantage of the crises.

In this time of disruption and uncertainty, it is more important than ever to ensure that you and your organisation are fully aware of the latest tricks being employed by the fraudsters as well as how to strengthen your controls and how to minimize the risk exposure and damages.

An effective fraud requires both an opportunity for the fraudster and a control weakness on behalf of the victim.

The current global situation is helping to create both conditions in abundance.

Opportunities for fraud

■Disruptio■ and uncertainty often create opportunities for fraud. At short notice, businesses and individuals are working under unusual condition, with unfamiliar counterparts, facing urgent deadlines and with limited ability to forecast what will happen in the near future.

■The start of the pandemic was marked by a significant rise in spam messages, malware attacks, phishing emails and malicious URLs — links leading to malware downloads or scams.

■O■e area where banks are fighting back is credit card fraud. Safeguards such as two-factor authentication — where a customer must respond to a text sent by the bank to their mobile phone before a transaction can go through — are reducing instances where criminals can access accounts.

■I■ response, fraudsters have moved towards so-called social engineering fraud, a category of scam where the victim willingly makes a purchase, believing it is legitimate.

■I■ the connected world in which we live, it is often easier to commit fraud across borders than inside one’s own country.

There is no better time than now for governments to work with their neighbour’s and go after criminals in each other’s countries.

Such an effort has been led by INTERPOL, an inter-governmental organization with 194 member countries, including many developing countries.

INTERPOL has been receiving information from member countries on a near-daily basis regarding coronavirus fraud cases, along with requests to help stop fraudulent payments.

While targeted victims have been primarily located in Asia, criminals have used bank accounts in other regions such as Europe.

INTERPOL has helped national authorities to block some of the payments, assisting with some 30 COVID-19 related fraud scam cases.

Where cooperative agreements between countries do not exist, perhaps a silver lining of the current crisis would be to promote such cross-border consumer protection efforts.

The private sector must also play a critical role in protecting consumers during the crisis.

In the course of providing financial services, trusted firms can educate customers about how to avoid pitfalls, such as responding to fraudulent communications.

There is also the need for digital financial services companies to have effective consumer complaint and resolution centers so that customers who have been scammed have some recourse.

Hard decisions are being made every day by governments, medical professionals, companies and individuals.

The dust will not settle for a long time, and we will continue to feel ripple effects in all areas of life for years to come.

And although business practices may not be top of the mind right now while we face these difficult changes, organisations are encouraged to look towards the future to protect themselves, and their employees, against fraud.

Because it’s not a question of if we see more fraud, it’s a question now of how much we will see.