Fraud is an ever-pressing issue in our world today, and with digital capabilities (ChatGPT anyone?) only growing, it’ll continue to head in that direction.
Community financial institutions (CFIs), such as credit unions and community banks, are particularly vulnerable to communications fraud. According to a report by the American Bankers Association, community banks, and credit unions pay an average of $4 for every $1 lost on fraud. It’s critical for CFIs to take proactive steps to protect themselves against communications fraud, including employee education, implementing security protocols, and utilizing fraud detection technology. By doing so, they can minimize the financial impact of fraud and protect their bottom line.
One of the most common types of fraud pieces your teams will come across is phishing-related. Phishing scams are another common form of communications fraud. These attacks involve tricking people into revealing sensitive information or providing access to a business’s systems. Phishing attacks can be difficult to detect, and the consequences can be severe, including theft of intellectual property, financial loss, and reputational damage. These attacks can go after not only your consumers but also your internal teams in attempts to gain information about your CFI.
Phishing is broken down into three categories: Phishing, Smishing, and Vishing.
To protect against communications fraud, businesses should implement a range of security protocols. Employee education is one of the most critical measures that businesses can take. Employees should be trained to recognize and report suspicious activity, such as unusual phone calls or emails. Businesses should also implement strict access controls to limit who can access sensitive information and systems.
Another effective strategy is to implement fraud-fighting technology. This is most effectively done by adding a layer of secure and integrated digital communications. Being able to verify consumers properly, and collect sensitive information in a compliant manner, all while complying with regulations, is a vital component of fraud-fighting for any CFI
It’s important to note that communications fraud prevention is an ongoing process. As attackers become more sophisticated, businesses need to stay vigilant and adapt their security measures accordingly. Regular security audits can help businesses identify vulnerabilities and take steps to address them before they can be exploited.
Communications fraud is a growing threat that CFIs cannot afford to ignore. By understanding the different types of communications fraud and implementing a range of security measures, including employee education, security protocols, and fraud detection technology, businesses can protect themselves against financial loss and reputational damage.
In taking proactive steps to prevent communications fraud, you’ll ensure that you can avoid the high cost of ignoring this growing threat.
