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Scams have undergone a significant evolution in recent years, adjusting to the dynamics of our digital existence, and evolving with our communication preferences and channels. They have also diversified significantly expanding beyond traditional forms to encompass a wider array of deceptive tactics.
In a romance scam for example, the victim is convinced to transfer funds to an individual they believe they are romantically involved with. Scammers create fraudulent profiles to focus on potential victims, initiating a connection that they aim to nurture over an extended period of time. After gaining the trust of their target, the scammer will feign a predicament and request financial assistance. Regardless of the context, these deceitful schemes can have severe and distressing consequences for victims, impacting them both financially and emotionally.

Scams by the Numbers

UK Finance reports a staggering 26% surge in romance scams during the initial half of 2023, leading to a loss of £18.5 million for consumers. Alarmingly, individuals ensnared in scams initiated during the UK’s Covid lockdown may only be coming to terms with their victimization now, as each case averages nearly nine fraudulent payments, usually made over a long period of time.

Also, according to BioCatch data, financial scam cases surged by 19% globally in 2023. Notably, North America witnessed a staggering 183% spike, while the Asia Pacific region also experienced a substantial increase of 104%.

Insights from the Global 2023 GASA State of Scams Report reveal that phone calls (61%) and text messages (58%) emerged as the most prevalent scam communication channels. Notably, scammers predominantly utilized Facebook and WhatsApp as their platforms of choice. And alarmingly, only 59% of victims reported the scams to law enforcement.

Detecting Romance Scams: How Can We Fight back?

The increasing frequency of scams, including romance scams, has intensified demands from consumers and government entities for Financial Institutions (FIs) to both enhance protective measures and offer automatic compensation to victims. This has raised concerns about the potential financial burden it may impose on FIs.

The challenge lies in the intricacies of romance scams, which are notoriously elusive to detect and prevent. Victims often find themselves fully immersed with the scammer’s made-up persona, so everything appears normal. They use their regular devices for transactions, they are in their usual locations, and everything seems plausible according to traditional banking controls that look at basic data points.

Beyond the standard set of digital signs, demographic data can also prove insightful for financial institutions. A recent study, Shattering Gender Stereotypes in Scam Awareness and Education, by Javelin Strategy & Research, a leading advisory group specializing in payments, digital banking, fraud and security, shows that males are nearly three times as likely (73%) to be the victim of a romance scam compared to females (27%).

“The first crucial step in scam education is to make it abundantly clear that victims are not to blame in order to encourage more prolific reporting of these crimes,” said Tracy Kitten, Director of Fraud and Security at Javelin Strategy & Research. “When it comes to romance scams, or any scam for that matter, banks need to play a critical role in consumer education and protection. This starts with banks understanding the habits of different demographics, how criminals target them, and then helping their customers recognize the risky activities that make them vulnerable.”

BioCatch realized some time ago that a more comprehensive approach was needed to fight romance scams. Instead of solely focusing on the victim’s behavior, FIs must also scrutinize known suspicious behaviors exhibited by fraudsters as well. Specifically, the sudden initiation of accounts, a watchful eye for typical behaviors associated with the destination Mule Accounts. Additionally, looking for high value incoming payments, frequent and hurried logins, the use of VPN proxies, disparities between SIM and IP addresses, and the presence of risky applications all serve as potential red flags.

"Romance scams are particularly cruel and often devastating for victims, leaving them with both broken hearts and empty bank accounts. At BioCatch, we make it our mission to do what we can to help financial institutions protect their customers against scams, and our extensive experience tells us existing detection methods are not enough to detect romance scams,” said Thomas Peacock, Director of Global Fraud Intelligence. “Therefore, it’s time to consider a different approach. We believe that by using our knowledge of how fraudsters behave, we can identify the bad guys much easier than identifying potential victims, and by providing this information to banks, they can be empowered to take action to prevent victims from losing their hard-earned money.”

BioCatch Romance Scam Activity Links:

(Date): Customer Roundtable on Scams
(Date): Blog: Five Signs You May be Dealing with a Romance Scammer
(Date): Three Ways Banks Can Help with Scam Victims