Finance

Banks report ten-fold surge in digital scams, BioCatch says

Published

1 week ago

November 13, 2024

Leylaynr | E+ | Getty Images

U.S. and Canadian banks reported a ten-fold surge in digital scams this year as criminals flock to techniques that rely on duping customers into sending them money, according to cybersecurity firm BioCatch.

The sharp rise in reported scams from the first three quarters of 2023 comes as banks have put in place more controls to prevent account takeovers and other forms of fraud, according to BioCatch Director of Global Fraud Intelligence Tom Peacock.

“Fraudsters have realized that the humans are the weakest link,” Peacock said. “It’s easier to convince a human to do something through manipulation than it is to try and circumvent a technological control.”

BioCatch, a Tel Aviv-based firm that uses behavioral data from mobile apps and websites to help banks distinguish between real users and criminals, provided its findings to CNBC ahead of a report that culled information from 170 U.S. and Canadian institutions. The company said American Express, Barclays and HSBC are among its clients.

Banks are under pressure to kick criminals off their platforms and compensate more victims as regulators and lawmakers focus on the harm done by digital scams. JPMorgan Chase, Bank of America and Wells Fargo have said the Consumer Financial Protection Bureau may punish them for their roles in the giant Zelle payments network. Customers of the three banks reported a combined $166 million in Zelle transactions were fraudulent in 2023.

The rise of “social engineering scams,” in which criminals use persuasive tactics to convince victims to send them money, began around five years ago, but “really started to take off” in the past 18 months or so, Peacock said.

Zelle is the preferred way criminals extract their funds because it is faster than other remittance options, Peacock said.

“When social engineering scams really started to take off in the U.S., it kind of coincided with Zelle, because the two went together,” he said. “Platforms like Zelle are enabling fraudsters to be a lot quicker and more successful.”

Zelle owner Early Warning Services has said that while transaction volumes rose in 2023, reports of scams and fraud fell by almost 50%, and that only a tiny fraction of payment volumes are disputed as fraud.

The increase cited by BioCatch is also driven by greater identification of activity that the banks previously didn’t flag as scams because of mounting regulatory pressure, Peacock added. BioCatch declined to provide a specific number for reported scams, citing client confidentiality.

In another sign of the cat-and-mouse dynamic of cybercrime, BioCatch clients reported 59% fewer fraudulent account openings. Instead, criminals have focused on taking over existing bank accounts, leading to a three-fold increase in fraud through that channel, the firm said.

Finance

CFPB expands oversight of Apple Pay, other digital payments services

Published

4 hours ago

November 21, 2024

Business Finance News

Rohit Chopra, director of the CFPB, testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled “The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress,” in the Dirksen Building on Nov. 30, 2023.

Tom Williams | Cq-roll Call, Inc. | Getty Images

The Consumer Financial Protection Bureau on Thursday issued a finalized version of a rule saying it will soon supervise nonbank firms that offer financial services likes payments and wallet apps.

Tech giants and payments firms that handle at least 50 million transactions annually will fall under the review, which is meant to ensure the newer entrants adhere to the laws that banks and credit unions abide by, the CFPB said in a release. That would include popular services from Apple and Google, as well as payment firms like PayPal and Block.

While the CFPB already had some authority over digital payment companies because of its oversight of electronic fund transfers, the new rule allows it to treat tech companies more like banks. It makes the firms subject to “proactive examinations” to ensure legal compliance, enabling it to demand records and interview employees.

“Digital payments have gone from novelty to necessity and our oversight must reflect this reality,” said CFPB Director Rohit Chopra. “The rule will help to protect consumer privacy, guard against fraud, and prevent illegal account closures.”

A year ago, the CFPB said it wanted to extend its oversight to tech and fintech companies that offer financial services but that have sidestepped more scrutiny by partnering with banks. Americans are increasingly using payment apps as de facto bank accounts, storing cash and making everyday purchases through their mobile phones.

The most popular apps covered by the rule collectively process more than 13 billion consumer payments a year, and have gained “particularly strong adoption” among low- and middle-income users, the CFPB said on Thursday.

“What began as a convenient alternative to cash has evolved into a critical financial tool, processing over a trillion dollars in payments between consumers and their friends, families, and businesses,” the regulator said.

The initial proposal would’ve subjected companies that process at least 5 million transactions annually to some of the same examinations that the CFPB conducts on banks and credit unions. That threshold got raised to 50 million transactions in the final rule, the agency said Thursday.

Payment apps that only work at a particular retailer, like Starbucks, are excluded from the rule.

The new CFPB rule is one of the rare instances where the U.S. banking industry publicly supported the regulator’s actions; banks have long felt that tech firms making inroads in financial services ought to be more scrutinized.

The CFPB said the rule will take effect 30 days after its publication in the Federal Register.

Finance

SNOW, NVDA, BJ and more

Published

5 hours ago

November 21, 2024

Business Finance News

Finance

Baidu Q3 2024 earnings:

Published

8 hours ago

November 21, 2024

Business Finance News

Baidu on Nov. 12, 2024, unveiled a pair of glasses with a built-in AI assistant, putting up a Chinese rival to the Meta Ray-Bans that have proven a rare success in AI-powered hardware.

Bloomberg | Bloomberg | Getty Images

BEIJING — Chinese tech giant Baidu on Thursday posted a 3% annual drop in third-quarter revenue, nevertheless beating market expectations amid AI cloud growth.

The revenue print came in at $4.78 billion for the quarter ending on Sept. 30. Net income for the period rose by 14% to $1.09 billion.

Baidu noted a 12% surge in its non-online marketing revenue to the equivalent of $1.1 billion, mainly driven by its artificial intelligence cloud business.

Here’s what analysts expected the company to report for the quarter, according to LSEG estimates:

Revenue: $4.63 billion
Net income: $857.17 million

Baidu had reported revenue of 34.45 billion yuan ($4.75 billion) and net income of 6.68 billion yuan for the third quarter of 2023.

Beijing-based Baidu operates one of the major web browser search engines in China, along with a frequently used maps app. The company also sells cloud computing services. Online marketing drives a significant portion of the firm’s revenue.

In artificial intelligence, Baidu has promoted its Ernie chatbot as a local alternative to OpenAI’s ChatGPT, which isn’t available in China. Ernie bot now has 430 million users, Baidu said last week.

The company this month also announced that its Xiaodu AI Glasses will begin sales in the first half of next year. The wearable has at least one camera and uses Ernie’s AI capabilities and Baidu’s maps and search functions. While Baidu hasn’t revealed a price, the product is widely expected to be a Chinese alternative to Meta’s popular Ray-Ban smart glasses.

Baidu announced a management rotation last month, with Junjie He, formerly head of the mobile ecosystem group, becoming the company’s interim Chief Financial Officer, while former CFO Rong Luo assumed leadership of the mobile division.