Payment Scams Are Surging. Banks Need Help
Financial institutions are at the front lines of fighting fraud, but they can’t do it alone.
They’re doing their best.
Photographer: Tiffany Hagler-Geard/Bloomberg
’Tis the season for a surge in financial frauds and scams, a huge and growing problem that caused nearly $500 billion in losses globally last year, along with untold human suffering. Here’s hoping policymakers resolve to bring together the resources of government and industry to finally fight back.
Confusingly, US law distinguishes between fraud and scams. Financial institutions generally must reimburse customers for unauthorized payments, or fraud, if the error is reported quickly. After all, a customer who did nothing wrong shouldn’t be liable. But there are no such protections when customers authorize transfers to con artists. The latter crime has been growing fast, with losses from one type — investment scams — jumping 38% last year, to about $4.6 billion.