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Take On Payments, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Take on Payments and look forward to collaborating with you.

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May 8, 2023

A Fertile Environment for Scams

"Normally I would have done a test [wire] transfer but I wanted to get [all the money in the account] out."

This quote, from a New York Times story about a stressed-out small-business owner, encapsulates the way that fear and a perceived need for immediate action can result in payments authorization mistakes. Even worse, fear and decision-making under time pressure can create the perfect growing conditions for fraud to flourish.

Most of us would agree that a test transaction is a good idea when large sums of money are involved. At the same time, most of us can empathize with the business owner's decision-making in an atmosphere of fear, uncertainty, and doubt. Each of us perhaps remembers times when, in retrospect, we might have called our own behavior hasty.

We are in an environment of real information and misinformation that could encourage hasty behavior. Since mid-March, business executives, financial institution leaders, and consumers (including most likely you and me) have been thinking more about keeping our payments and accounts safe. And, sad to say, a lot of criminals have been plotting new ruses and building on old ways to take our money away from us.

As a Take On Payments post noted at the beginning of the COVID-19 pandemic, any time that people are worried is a good time to be particularly vigilant. Today, in a different time of worry triggered by some prominent bank failures, it's a good time to be vigilant:

  • In mid-March 2023, the Cybersecurity and Infrastructure Security Agency (CISA) warnedOff-site link : "exercise caution in handling emails with bank-related subject lines, attachments, or links."
  • Later that month, calledOff-site link bank failures "an irresistible, golden opportunity for scammers and fraudsters to exploit."
  • Also in March, financial institutions were warning customers about a scam asserting that an institution is under FBI review and to get cash out fast. Such "imposter scams" (impersonating government, businesses, tech support, and romantic partners, and more) cost consumers nearly $2.7 billion in losses in 2022, the FTC reported Adobe PDF file formatOff-site link in February 2023.

The scam scenarios are many and varied: financial institutions, businesses, and consumers receiving calls and emails from "customers" or "bank officials" to change payments instructions; plausible, yet false, website names being registered; and phishing, a perennial favorite, offering new incentives or dire warnings if immediate action isn't taken.

So, take a minute. Breathe deeply. Then dig into every element of that email or website address to weed out and stop the fraud.

The links cited in this post were embedded safely. Make sure the ones you come across are, too.