Fighting festive fraud
Due diligence essential before clicking on that too-good-to-be-true deal. By CK Leo
It’s no secret that holiday shopping is a boon for the retail industry, and the preponderance of double-digit sales like 12.12 continues to be one of the best opportunities for consumers to find great bargains in Asia.
Given the current state of the economy, coupled with inflation and the concomitant price increases we’re seeing on nearly all products and services, consumers are going to be hunting even harder for good deals this year.
More often these shopping activities are happening online, and just as we are eager to see huge price drops for our favourite items, fraudsters also see this as a great opportunity to lure undiscerning shoppers.
Specifically during this holiday sale season, we anticipate that real-time payment fraud will increasingly become a common ploy. With real-time payment fraud, customers might be asked to pay using money orders, wire transfers or account-to-account payment. But when they send money through these channels, they are unlikely to get it back.
As the cash is transferred nearly instantly, victims don’t have a window of time to reverse the payment once they realise they have been deceived by an illegitimate business or fake website. Fraudsters proceed to swiftly launder the money through a maze of accounts, making it hard to trace.
These schemes are often executed by taking advantage of people’s tendency to click on what might look like an attractive deal for highly sought-after goods, or fake delivery notifications with a phishing link.
Given the boom in e-commerce thanks to the pandemic, many shoppers aren’t just purchasing from long-established, secure sites any more, but are often making purchases from smaller online retailers for the first time.
To perpetrate their online holiday shopping scams, fraudsters often lure consumers onto a site via social media — usually for items that are in high demand like electronics or limitededition fashion, sneakers and luxury goods — and trick their targets into transacting outside of the e-commerce platform. However, the items may be counterfeit products, or worse — they don’t arrive at all.
To avoid falling prey to such schemes, consumers should take preventive measures to protect themselves against festive fraud. For instance, they should be selective and shop on official websites or mobile apps when possible.
When making purchases on thirdparty platforms, it’s always a good idea to cross-reference with official sources if a deal seems too good to be true. If they suspect a fraudulent charge, they should inform their bank immediately.
Consumers should also be mindful when receiving scam text messages with links to bonanza sales, or even e-mails masquerading as receipts for recent purchases. They need to do their due diligence and verify that the offer is from an official source before clicking on any links. They must also be discerning about small discrepancies such as counterfeit links that mimic official websites.
However, even with the best precautions, savvy consumers are still vulnerable to being exploited. Financial institutions have an added responsibility to their customers and a role to play in taking a proactive stance in mitigating consumers’ risks. Banks should engage in customer education on the safe use of payment cards, and digital banking credentials will be valuable.
There are also new advances in artificial intelligence models that can help spot uncharacteristic spending behaviour or significant transactions that may be unauthorised.
As well, it’s important to have intelligent, two-way communication with customers that can reach them via any channel, including SMS, e-mail, phone or app alert. This builds trust with the consumer that the bank is able to help prevent likely fraud and is involving customers in confirming what is legitimate and what might be a scam.