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In an era of increased banking options and billions being made by Chase and Bank of America (among others), it shouldn’t surprise anyone that cybercriminals have made financial institutions a lucrative target. But unfortunately, robbing banks is never as easy (or as simple) as walking through the door. That’s just Hollywood fiction. Alternatively, bad actors depend on tactics to trick unsuspecting banks and customers into surrendering their account information.
Unfortunately, 2020, highlighted by the COVID-19 pandemic, was marked by cyber-attack-leveraged vulnerabilities in the hastily set up work-from-home deployments. Small businesses were at the most significant risk of closure following global lockdowns. In the pursuit of continuity, cybersecurity often took the backseat. The lines between personal and business devices blurred, and many small companies allowed employees to access their internal resources via their mobile devices. This large-scale, work-from-home experiment also created a cybersecurity disaster for smaller companies with limited or no IT staff and resources.
You can’t risk your bank being unprepared and ill-equipped for that next cyberattack. If you’re a small business, you don’t have the time or resources to miss even once.
Therefore, we’ve provided a short guide on everything you need to know about banking scams and what you can do to protect your bank from future evolving threats.
What are the top banking scams you should be aware of right now?
According to Security Magazine, these are the top 5 banking scams:
- Account Takeover (ATO) (42%) – Fraudsters gain access to account credentials and take over the account, including changing the password and address.
- Account Opening Identity Theft (23%) – Fraudsters open accounts using stolen identities. Victims often become aware of this scam when debt collectors call.
- Impersonation Scams (21%) – Fraudsters pretend to be a government official or authority figure to gain access to an account or trick victims.
- Purchase Scams (15%) – Buyers pay for items online that never arrive in purchase scams.
- Phishing (7%) – Typically, scammers use emails that trick account holders into revealing personal information.
Is banking fraud on the rise?
The short answer is yes. What has skyrocketed banking fraud in the past few years is the acceleration of mobile banking and the COVID-19 pandemic. Lookout, a San Francisco, California-based provider of mobile security solutions, reported that over 20% of consumer banking customers encountered banking malware on their mobile devices. What’s troubling with these numbers is how much bank fraud has increased in the past two years. Feedzario, a financial data research organization, found significant findings from the financial sector with their recent 2022 Q1 report.
Here are some of the highlights from the report:
- 233% increase in fraud attack rates from 2019 to 2021
- 65% increase in online transactions from 2019 to 2021
- 75% decrease in US cash withdrawals compared 2019 to 2021
- 30% of attempted online transactions were fraudulent – indicating a rise in card-not-present (CNP) fraud over two months.
- Four thousand social engineering attacks occurred in a ten-day testing period.
Are large banks the only financial institutions at risk of being defrauded?
According to a recent Forbes article, large banks are often on the front page of every media source when they fall victim to cyber infiltration. Furthermore, “In 2021, Chase Bank and Morgan Stanley and other large financial institutions fell victim to data breaches or experienced phishing attempts,” according to the Carnegie Endowment for International Peace.
However, large banks aren’t the only cybercrime casualty. Small business banks also fall prey to data breaches and cyberattacks; you just don’t see them on the 5 o’clock news. Having said that, here are some key cybersecurity statistics for small business owners from Cybersecurity Magazine:
- 43% of all data breaches involve small and medium-sized businesses (SMBs).
- If you’re still in denial about the chances of your small business becoming a victim, 61% of all SMBs have reported at least one cyber-attack during the previous year.
- A benchmark study by CISCO found that 40% of the small businesses that faced a severe cyber-attack experienced at least eight hours of downtime. And this downtime accounts for a major portion of the overall cost of a security breach.
- 83% of SMBs are not financially prepared to recover from a cyber-attack.
- 43% of SMBs do not have any cybersecurity plan in place.
How can you protect your bank from these scams?
The days of being a passive bystander and “dealing with it when it happens” are gone. Unfortunately, you no longer have the luxury of simply depending on your anti-virus software and deleting suspicious email links to get by. Today’s threat actors are proactively infiltrating your bank’s network, starting with the weakest link in the chain, your employees.
- Invest in cybersecurity awareness training for your employees. Educate your staff on social engineering scams, conduct random phishing assessments, and keep reinforcing the importance of being constantly vigilant towards suspicious online behavior.
- Be careful who you give personal information to. Threat actors will create free giveaways to sign-up for so they can access identifying information to impersonate you and illegally access your accounts.
- Always have an offline backup of your bank’s data. Backing up your data offline will save you considerable time and money in the case of a data breach.
- Implement multi-factor authentication (MFA). Multi-factor authentication provides an extra layer of security by requiring you to take an extra step after entering your password. In addition, MFA makes it even more challenging to hack, even if your password is compromised.
- Use longer passphrases in your passwords. Using passphrases (a long combination of words) is more effective than using a complex password with unique characters and should be at least 12 characters long.
Finally, know that security incidents will inevitably occur despite doing everything right. Your best bet is to work with an expert who will guide you through creating a robust, comprehensive cybersecurity plan for your bank. To learn more about how we might be able to help you, click here.