When I was at university, I worked at my local supermarket. During one shift, a customer asked me to change £100 into smaller notes. Somewhat bizarrely, he altered his request just as I went to hand over the money. This back and forth happened a few times. After a couple of minutes of this, with impatient customers glaring at us as the queue built up, I stopped and told the customer that I couldn’t help him anymore.
But, as it turned out, I hadn’t just built up a queue, I had unwittingly handed over the supermarket’s cash to a fraudster. Like thousands of us each year, I had been tricked. The scam was so seamless that even immediately after, speaking to my manager, I could barely comprehend what had happened. All I knew was that by talking throughout, changing his mind multiple times and confusing me, the fraudster had managed to dupe me out of extra cash from the till. And all this despite the fact I already knew about this type of scam.
Today, technology has given fraudsters new toys which they can use to play the same old tricks. Fake cryptocurrencies with big returns advertised on Facebook might seem new but, really, they’re not much different to the notorious Charles Ponzi who, almost a century ago, promised to double investors’ money in 90 days through a bizarre and ultimately fake money-making opportunity.
When I was defrauded, I locked myself in the toilet and cried. I hadn’t personally lost the money but I barely told anyone, felt useless at my job and contemplated leaving out of sheer embarrassment.
It’s hard not to fall for these tricks. They’re clever, psychological ploys which play on our very nature. For instance fraudsters often tell their victims that time is scarce – that they must act now to ‘protect their savings’! And then, victims who are largely focused on ‘protecting’ their money, fail to consider that the whole thing could be a ruse. Fraudsters have used the same tactic at our doorsteps for decades, albeit dodgy guttering or faulty utilities that were once the focus.
These tricks are effective – standing the test of time under new guises. Last month, TSB became the first bank in the UK to acknowledge this problem by promising to fully refund any of its customers that fall victim to fraud. Unlike many other banks, TSB have pledged to cover all types of fraud, even authorised push payment (APP) scams, where the customer has themselves authorised the transaction.
We support the sentiment behind TSB’s pledge as we think anyone could be tricked by these fraudsters. However, we also recognise that there may be unintended consequences, such as increasing false claims. What we really hope is that this guarantee will encourage all banks to focus on prevention and conduct robust research into what they can do to reduce their customers’ susceptibility to fraud – whether or not they intend to refund them.
On the research front we’ve made a start. This year, we partnered with HSBC UK to run what we believe to be one of the first large, robust studies in this area. We are running a large-scale RCT to test the effectiveness of introducing dynamic, behaviourally-informed interventions that target customers during the ‘new payee’ journey in online banking. These interventions are designed to interrupt vulnerable customers who might otherwise have been encouraged into a ‘hot state’ (stressed, fearful) by a fraudster. We hypothesise that, by applying a scientific understanding of human behaviour, we can identify the most effective levers to get customers to pause and reflect on the situation and, ultimately, protect their money.
It needn’t stop there, though. Fraudsters are inventive – they keep coming up with new ways to trick their victims – and so we must come up with new ways to counter them. Banks, online marketplaces and telecoms providers to name a few, have data and customer touchpoints which they could put to better use. If the problem is that customers are sharing sensitive security codes with fraudsters, banks could test how the messaging that accompanies these codes is worded. If customers keep falling for certain types of fraudulent ads, online marketplaces could look for particular cues and warn their customers appropriately. And if fraudsters continue to automate their calls to landlines, telecoms providers could explore how to increase the adoption of anti-nuisance call technology.
When I was defrauded, I locked myself in the toilet and cried. I hadn’t personally lost the money but I barely told anyone, felt useless at my job and contemplated leaving out of sheer embarrassment. In the months that followed, it even impeded my ability to trust customers in the same way I had before. As welcome as TSB’s fraud guarantee is, it doesn’t stop this type of damage.
We want to use behavioural science to prevent not only the significant financial losses fraud victims face but also the emotional harm they suffer. So, we will be concentrating our efforts in this space for the foreseeable future.