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Written by: Mike Yang

Today Pindrop Security released “KYF: Know Your Fraudster,” our 2013 Phone Fraud Report. You already Know Your Customer (KYC), time to know the other callers into your institution.
We examined phone fraud activity affecting financial services institutions during the first six months of 2013 and found some staggering figures, most notably that 1 call for every 2,500 calls into financial institution call centers is a fraud call. While this number may initially appear tiny or even negligible, when you consider that call centers receive upwards of tens to hundreds of thousands of calls a month, the presence of inbound fraudulent activity into call centers across America is substantial.
Phone fraud is a multimillion-dollar industry, often led by professional, organized attackers. Financial institution call centers rank among the largest targets for phone fraudsters, with attackers using a variety of social engineering and account manipulation techniques to steal via wire transfers, Account Clearing House (ACH), and cards. Financial services companies lose millions of dollars each year due to phone fraud.
Here are some of the key findings from our report:

  • Phone Fraud has a Significant Financial Impact
    • The average potential loss from phone fraud per financial account was $42,546;
    • The two account categories with the highest losses were $1-$25,000 and $75,000-$99,000, which correspond to average credit card account size and average home equity line size, respectively.
  • Phone fraud is organized and scaling
    • Individual fraudsters targeted anywhere from 5-10 accounts to as many as 200-300 accounts;
    • More than half (57 percent) of fraud calls are from fraud groups working together – in groups ranging from 2 to 12 members;
    • Roughly half of all fraud calls originated from mobile devices, while one third came from VOIP and the remainder (14%) from landlines. This contrasts with legitimate calls, of which 14% are VOIP and the remainder split between mobile devices and landlines.
  • Fraudsters are increasingly targeting consumers directly
    • During 2012, Pindrop Security counted over 2.4M consumer complaints of phone fraud attempts. By comparison, Pindrop detected 2.3M complaints for the first half of 2013;
    • More than 73,000 consumer complaints indicated that the fraudster was impersonating a financial institution. Nine of the top ten financial institutions were named in these fraud attempts.

For more information and to learn more about phone fraud and Phoneprinting, click here.