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How are social media sites the new gateways to financial fraud?

Social Business Manager, IBM

One summer many years ago, my husband and I got our first taste of financial fraud when one of our debit cards was stolen to the tune of $4,000. It all happened quickly and strategically—in five hours, tops. The fraudsters infiltrated multiple ATMs and grocery stores within 10 miles of our home, withdrawing $100 here and initiating a $300 cash-back request there for a total of 40 separate transactions. What killed me, though, was that I was logged into my account as it happened. When I called the bank to report the activity, I learned that because I had not set up an alert, and because the activity was local, the bank had noticed nothing too far out of the ordinary. Really? Who purchases 12 sticks of gum and then asks for $300 back in cash?

The mud slid downhill from there. Our rent check bounced, and we had to pay for four weeks of infant childcare—which, as any parents out there know, is devastating to a monthly budget. It felt like a second mortgage. After 10 business days of living cautiously off credit cards, we finally recouped our full losses.

Staying secure in a social culture

Yet our story represents only a single drop from the constantly dripping faucet of financial fraud. Can you imagine having to deal with the aftermath of the theft of nearly $1 billion from the Bangladesh Bank, stolen via SWIFT transfer? Why weren’t built-in checks and balances ready and waiting to identify suspicious activity?

Worse, according to American Bankers Association economist Jane Yao, thieves now have new playgrounds about which to lurk: social media sites. And it makes sense: After all, we’re in an era of oversharing, of tagging people and locations, of documenting more than just likes and dislikes—dates of birth, maiden names, names of kids, hometowns, and more—across multiple platforms. These unique fingerprints don’t require intensive hacking to lift; a simple Internet search can turn up more than we imagine. Not surprisingly, then, thieves have access to an overabundance of PII, or personally identifiable information, that they can use when attempting to access your finances.

Taking charge of your assets

According to the IBM Institute for Business Value study “Winning the face-off against fraud,” 49 percent of banking executives either wait for customers to complain about fraud or can’t even detect fraud to begin with. Has failure become the norm, then? Customers should be able to expect more of business.

Facing stakes reaching into the billions of dollars, banks must make vigilance their watchword as they attempt to identify and stop fraud quickly and accurately using cognitive counterfraud management. No financial institution—or individual—should ever have to feel like a hostage as thieves ransack every asset in sight.

If you’re interested, learn more about counterfraud solutions for banking and insurance. Also, discover the capabilities of cognitive fraud detection when you attend IBM Insight at World of Watson 2016.