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Updated November 17th Related Posts Link to automotive form, business form
As Valentine’s Day approaches, hearts will melt, but some will inevitably be broken by romance scams. This season of love creates an opportune moment for scammers to prey on individuals feeling lonely or seeking connection. Financial institutions should take this time to warn customers about the heightened risks and encourage vigilance against fraud. In a tale as heart-wrenching as it is cautionary, a French woman named Anne was conned out of nearly $855,000 in a romance scam that lasted over a year. Believing she was communicating with Hollywood star Brad Pitt; Anne was manipulated by scammers who leveraged AI technology to impersonate the actor convincingly. Personalized messages, fabricated photos, and elaborate lies about financial needs made the scam seem credible. Anne’s story, though extreme, highlights the alarming prevalence and sophistication of romance scams in today’s digital age. According to the Federal Trade Commission (FTC), nearly 70,000 Americans reported romance scams in 2022, with losses totaling $1.3 billion—an average of $4,400 per victim. These scams, which play on victims’ emotions, are becoming increasingly common and devastating, targeting individuals of all ages and backgrounds. Financial institutions have a crucial role in protecting their customers from these schemes. The lifecycle of a romance scam Romance scams follow a consistent pattern: Feigned connection: Scammers create fake profiles on social media or dating platforms using attractive photos and minimal personal details. Building trust: Through lavish compliments, romantic conversations, and fabricated sob stories, scammers forge emotional bonds with their targets. Initial financial request: Once trust is established, the scammer asks for small financial favors, often citing emergencies. Escalation: Requests grow larger, with claims of dire situations such as medical emergencies or legal troubles. Disappearance: After draining the victim’s funds, the scammer vanishes, leaving emotional and financial devastation in their wake. Lloyds Banking Group reports that men made up 52% of romance scam victims in 2023, though women lost more on average (£9,083 vs. £5,145). Individuals aged 55-64 were the most susceptible, while those aged 65-74 faced the largest losses, averaging £13,123 per person. Techniques scammers use Romance scammers are experts in manipulation. Common tactics include: Fabricated sob stories: Claims of illness, injury, or imprisonment. Investment opportunities: Offers to “teach” victims about investing. Military or overseas scenarios: Excuses for avoiding in-person meetings. Gift and delivery scams: Requests for money to cover fake customs fees. How financial institutions can help Banks and financial institutions are on the frontlines of combating romance scams. By leveraging technology and adopting proactive measures, they can intercept fraud before it causes irreparable harm. 1. Customer education and awareness Conduct awareness campaigns to educate clients about common scam tactics. Provide tips on recognizing fake profiles and unsolicited requests. Share real-life stories, like Anne’s, to highlight the risks. 2. Advanced data capture solutions Implement systems that gather and analyze real-time customer data, such as IP addresses, browsing history, and device usage patterns. Use behavioral analytics to detect anomalies in customer actions, such as hesitation or rushed transactions, which may indicate stress or coercion. 3. AI and machine learning Utilize AI-driven tools to analyze vast datasets and identify suspicious patterns. Deploy daily adaptive models to keep up with emerging fraud trends. 4. Real-time fraud interception Establish rules and alerts to flag unusual transactions. Intervene with personalized messages before transfers occur, asking “Do you know and trust this person?” Block transactions if fraud is suspected, ensuring customers’ funds are secure. Collaborating for greater impact Financial institutions cannot combat romance scams alone. Partnerships with social media platforms, AI companies, and law enforcement are essential. Social media companies must shut down fake profiles proactively, while regulatory frameworks should enable banks to share information about at-risk customers. Conclusion Romance scams exploit the most vulnerable aspects of human nature: the desire for love and connection. Stories like Anne’s underscore the emotional and financial toll these scams take on victims. However, with robust technological solutions and proactive measures, financial institutions can play a pivotal role in protecting their customers. By staying ahead of fraud trends and educating clients, banks can ensure that the pursuit of love remains a source of joy, not heartbreak. Learn more
As data breaches become an ever-growing threat to businesses, the role of employees in maintaining cybersecurity has never been more critical. Did you know that 82% of data breaches involve the human element1 , such as phishing, stolen credentials, or social engineering tactics? These statistics reveal a direct connection between employee identity theft and business vulnerabilities. In this blog, we’ll explore why protecting your employees’ identities is essential to reducing data breach risk, how employee-focused identity protection programs, and specifically employee identity protection, improve both cybersecurity and employee engagement, and how businesses can implement comprehensive solutions to safeguard sensitive data and enhance overall workforce well-being. The Rising Challenge: Data Breaches and Employee Identity Theft The past few years have seen an exponential rise in data breaches. According to the Identity Theft Resource Center, there were 1,571 data compromises in the first half of 2024, impacting more than 1.1 billion individuals – a 490% increase year over year2. A staggering proportion of these breaches originated from compromised employee credentials or phishing attacks. Explore Experian's Employee Benefits Solutions The Link Between Employee Identity Theft and Cybersecurity Risks Phishing and Social EngineeringPhishing attacks remain one of the top strategies used by cybercriminals. These attacks often target employees by exploiting personal information stolen through identity theft. For example, a cybercriminal who gains access to an employee's compromised email or social accounts can use this information to craft realistic phishing messages, tricking them into divulging sensitive company credentials. Compromised Credentials as Entry PointsCompromised employee credentials were responsible for 16% of breaches and were the costliest attack vector, averaging $4.5 million per breach3. When an employee’s identity is stolen, it can give hackers a direct line to your company’s network, jeopardizing sensitive data and infrastructure. The Cost of DowntimeBeyond the financial impact, data breaches disrupt operations, erode customer trust, and harm your brand. For businesses, the average downtime from a breach can last several weeks – time that could otherwise be spent growing revenue and serving clients. Why Businesses Need to Prioritize Employee Identity Protection Protecting employee identities isn’t just a personal benefit – it’s a strategic business decision. Here are three reasons why identity protection for employees is essential to your cybersecurity strategy: 1. Mitigate Human Risk in Cybersecurity Employee mistakes, often resulting from phishing scams or misuse of credentials, are a leading cause of breaches. By equipping employees with identity protection services, businesses can significantly reduce the likelihood of stolen information being exploited by fraudsters and cybercriminals. 2. Boost Employee Engagement and Financial Wellness Providing identity protection as part of an employee benefits package signals that you value your workforce’s security and well-being. Beyond cybersecurity, offering such protections can enhance employee loyalty, reduce stress, and improve productivity. Employers who pair identity protection with financial wellness tools can empower employees to monitor their credit, secure their finances, and protect against fraud, all of which contribute to a more engaged workforce. 3. Enhance Your Brand Reputation A company’s cybersecurity practices are increasingly scrutinized by customers, stakeholders, and regulators. When you demonstrate that you prioritize not just protecting your business, but also safeguarding your employees’ identities, you position your brand as a leader in security and trustworthiness. Practical Strategies to Protect Employee Identities and Reduce Data Breach Risk How can businesses take actionable steps to mitigate risks and protect their employees? Here are some best practices: Offer Comprehensive Identity Protection Solutions A robust identity protection program should include: Real-time monitoring for identity theft Alerts for suspicious activity on personal accounts Data and device protection to protect personal information and devices from identity theft, hacking and other online threats Fraud resolution services for affected employees Credit monitoring and financial wellness tools Leading providers like Experian offer customizable employee benefits packages that provide proactive identity protection, empowering employees to detect and resolve potential risks before they escalate. Invest in Employee Education and Training Cybersecurity is only as strong as your least-informed employee. Provide regular training sessions and provide resources to help employees recognize phishing scams, understand the importance of password hygiene, and learn how to avoid oversharing personal data online. Implement Multi-Factor Authentication (MFA) MFA adds an extra layer of security, requiring employees to verify their identity using multiple credentials before accessing sensitive systems. This can drastically reduce the risk of compromised credentials being misused. Partner with a Trusted Identity Protection Provider Experian’s suite of employee benefits solutions combines identity protection with financial wellness tools, helping your employees stay secure while also boosting their financial confidence. Only Experian can offer these integrated solutions with unparalleled expertise in both identity protection and credit monitoring. Conclusion: Identity Protection is the Cornerstone of Cybersecurity The rising tide of data breaches means that businesses can no longer afford to overlook the role of employee identity in cybersecurity. By prioritizing identity protection for employees, organizations can reduce the risk of costly breaches and also create a safer, more engaged, and financially secure workforce. Ready to protect your employees and your business? Take the next step toward safeguarding your company’s future. Learn more about Experian’s employee benefits solutions to see how identity protection and financial wellness tools can transform your workplace security and employee engagement. Learn more 1 2024 Experian Data Breach Response Guide 2 Identity Theft Resource Center. H1 2024 Data Breach Analysis 3 2023 IBM Cost of a Data Breach Report
In our most recent webinar, I had the pleasure of moderating a panel session with four fraud experts spanning across many diverse backgrounds. The consistent theme throughout was that cyber criminals have become quite proficient at stealing data or account credentials. Once a cyber criminal has valid account data, they have incredible access to a broad range of possibilities. How an account is used; a real-time view of deposit and withdrawal patterns and what types of alerts and notification settings are in place. A determined fraudster may observe accounts for long periods to ensure they are able to make their move at the optimal time. One of the biggest issues is being able to tell “friend from foe”, particularly in light of the endless supply of perfect, disposable data. I posed this scenario to our panel and asked what organizations can do now to protect themselves: SCENARIO – Telling friend from foe Credit card companies encourage travellers to alert them in advance of unusual travel to avoid red flags or declines while out of town. This can be a double-edged sword. A fraudster with appropriate credentials can contact a credit card company a few weeks before a “trip” to alert them of planned travel. At the start of the “trip” the distraught fraudster can then contact the credit card company to report a stolen card and request a replacement be expedited to them at their “destination.” The result is a fraudster armed with a completely legitimate card they can use at their leisure and with little risk of detection. There were three key take-aways the expert panel recommended: Enhance your visibility. Without this important tactic, you won’t know what hit you. Fraudsters are armed with pristine identity data so they will look and act more like your best customers. Employee multiple security layers. You may be focused on ensuring that you know your customer, but does the transaction pattern fit normal behavior for the user? Malware could be embedded on the device. Are items such as language and other settings consistent with what you’d expect for your legitimate customers? Protect profile setups / online enrolment and reward programs the way you protect transactions. While the financial risk to your business may be limited, the potential regulatory exposure and brand reputation hit can be significant. It takes years to build your reputation with your best customers – but only seconds to destroy it. Undermining their trust in online or mobile interactions with your business has an immediate and destructive impact on loyalty. What do you think? Let us know.
Residential real estate lending was the leading component of the Great Recession of 2007-2009. Could it happen again? Let’s analyze our Intelliview data to see where U.S. lending trends are headed with HELOCs. A large portion of Home Equity Lines of Credit (HELOCs) were originated from 2004 to 2007. The term structure of these HELOCs will soon result in larger monthly payments, which could potentially promote consumer debt burden troubles. Additionally, with as much as 13% of all first mortgage customers having balances greater than the value of homes, many HELOCs wallow underwater. HELOCs typically have a ten year draw followed by a twenty-year repayment period. However, there are variations in the term structures. HELOCs can have as little as a five year draw, while others have a fifteen year repayment period. During the draw period, customers only pay interest on the balance. In the repayment period, the account functions like a loan, customers pay principal and interest. In 2012, the Office of Comptroller of the Currency (OCC, the primary banking regulator) reported that 58% of all bank HELOC balances would enter the repayment period and begin to amortize between 2014 and 2017 (OCC, Semiannual Risk Perspective, Spring 2012). This report renewed fears that the increase in payments would lead to higher delinquencies and foreclosures, limit consumer spend and provide a drag on the U.S. economy. Paradoxically, the OCC estimates of the HELOC balances entering the repayment period may be low. The OCC has accounted only for $392 billion of HELOC balances among banks. Experian’s review of all HELOC trades shows a significantly higher level of balances. Additionally, American Banker estimates the top 200 banks and thrifts had more than $477 billion in HELOC outstanding as of the end of 2013, with the top three lenders (Bank of America, Wells Fargo and JP Morgan Chase) comprising nearly $300 billion. Experian examined HELOCs in the four states with the greatest surges in home values and lending prior to the Great Recession. California comprises nearly 19% of all HELOC balances and lines. With averaging HELOC balances of 53% above the national mean, Arizona, Florida and Nevada are the three highest utilization rates by state. Nevada has the highest 30+ day delinquency rate in the country at 2.92%, while the national average is 1.64%. According to CoreLogic’s most recent home price index report, Nevada, Florida and Arizona home prices remain 30-39% below their peak real estate values. California’s prices are down 17%, and the national average home value is still 14% below its highest value. Refinancing HELOCs may be difficult due to the significant number of second liens still underwater. Compounding this difficulty, lending standards also have tightened, with regard to loan-to-value, debt ratios and credit quality. The average HELOC was examined at a 4.5% interest rate and a 20 year repayment period. The average monthly payment increases almost 69% when the account leaves the draw period and requires paying principal balance as well as interest. This payment increase accounts for approximately 2.6% of the median U.S. household gross annual income. It is estimated that the increase in HELOC payments will comprise $1 billion in additional annual payments during 2014, and an additional $9 billion between 2015 through 2017. However, it is important to remember that not all HELOCs will reach repayment. HELOCs are priced based on the prime rate. That rate has been 3.25% for more than five years, a historical low. When prime rate reached this level in December 2008, the rate was at its lowest in 53 years. Only 18 months prior to reaching 3.25%, the prime rate had been 8%. If the prime rate increases by 1% to 4.25%, the average payment of accounts in the draw period would increase 22%, affecting just about every HELOC, with a national increase in annual payments of about $5 billion. The volume of HELOCs that are beginning to enter the repayment period may eventually increase delinquency rates. However, no such increase is yet evident. As shown below, delinquency rates are steady after a long decline. In the past three years, 90+ days delinquency has declined 41%. The Majority of HELOCs are second mortgages. Successful completion of a foreclosure would involve making the customer’s monthly first mortgage payment in addition to all other expenses incurred in foreclosure and the sale of the property. Very often foreclosing from a second lien does not make financial sense unless the financial institution also holds the first mortgage on the property. As a large portion of HELOCs enter the repayment period in the next four years, the payments that customers must make will increase considerably. With interest rates as low as they are, the prime rate will eventually rise, and increase debt service ratios. These payment increases will have implications on consumers, lenders and the economy. Having grown 10.5% in the last year, home values continue to recover from the recession. It is yet to be determined whether this payment increase will have a broader or more isolated impact. In the meantime, HELOCs will continue to see their resurgence. For more insight like this from Experian Decision Analytics, watch our 2014 Q1 Experian–Oliver Wyman Market Intelligence Report presentation.
Are you sure you are making the best consumer credit decisions? Given the constantly evolving market conditions, it is a challenge to keep informed. In order to confidently grow and manage the bottom line, organizations need to avoid these four basic risks of making credit decisions with limited trend visibility. Competitive Risk – With limited visibility to industry trends, organizations cannot understand their position relative to peers. Product Risk – Organizations without access to the latest consumer behaviors cannot identify and capitalize on emerging trends. Market Risk – Decisions suffer when made without considering market trends in the context of the economy. Resource Risk – Extracting useful insights from vast market data requires abundant resources and comprehensive expertise. Get more information on the business risks of navigating credit decisions with limited trend visibility.