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

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2 months ago

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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.

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Jamie Dimon on Trump’s tariffs: ‘Get over it’

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Jamie Dimon on tariffs: If it's a little inflationary but good for national security, so be it

JPMorgan Chase CEO Jamie Dimon said Wednesday the looming tariffs that President Donald Trump is expected to slap on U.S. trading partners could be viewed positively.

Despite fears that the duties could spark a global trade war and reignite inflation domestically, the head of the largest U.S. bank by assets said they could protect American interests and bring trading partners back to the table for better deals for the country, if used correctly.

“If it’s a little inflationary, but it’s good for national security, so be it. I mean, get over it,” Dimon told CNBC’s Andrew Ross Sorkin during an interview at the World Economic Forum in Davos. “National security trumps a little bit more inflation.”

Since taking office Monday, Trump has been saber-rattling on tariffs, threatening Monday to impose levies on Mexico and Canada, then expanding the scope Tuesday to China and the European Union. The president told reporters that the EU is treating the U.S. “very, very badly” due to its large annual trade surplus. The U.S. last year ran a $214 billion deficit with the EU through November 2024.

Among the considerations are a 10% tariff on China and 25% on Canada and Mexico as the U.S. looks forward to a review on the tri-party agreement Trump negotiated during his first term. The U.S.-Mexico-Canada Trade Agreement is up for review in July 2026.

Dimon did not get into the details of Trump’s plans, but said it depends on how the duties are implemented. Trump has indicated the tariffs could take effect Feb. 1.

“I look at tariffs, they’re an economic tool, That’s it,” Dimon said. “They’re an economic weapon, depending on how you use it, why you use it, stuff like that. Tariffs are inflationary and not inflationary.”

Trump leveled broad-based tariffs during his first term, during which inflation ran below 2.5% each year. Despite the looming tariff threat, the U.S. dollar has drifted lower this week.

“Tariffs can change the dollar, but the most important thing is growth,” Dimon said.

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