From Mary Ann Miller, VP Evangelist & Fraud Executive Advisor at Prove

Scams are rising in frequency and costs for consumers, businesses, and governments around the globe. In fact, according to the Federal Trade Commission (FTC), the US lost over $10B to fraud in 2023. It’s a staggering number that sets a record high and a 14% increase since 2022. What’s more, the FTC identifies investment-related scams as the most prevalent in the country in 2023 at a total of $4.6B in losses. While the year’s most active category of scams involved criminals impersonating government agencies or businesses. 

Scammers commonly use time to their advantage. Victims of scams may be pressured to take certain actions right away, and criminals hope to receive their ill-gotten payments before financial institutions are any the wiser. That’s why the UK is preparing to introduce new rules in October 2024, allowing banks to pause suspicious payments for up to 72 hours past the country’s current limit (the end of the next business day). This extra time for banks will give them a better chance of stopping money from being sent to fraudsters, coupled with cutting-edge identity verification and authentication technology, such as Prove, that can act as a catalyst for the Anti-Scam Revolution.  

Historic Action — Buying Time in the UK

The UK’s upcoming draft legislation is designed to buy banks precious time to contact customers, verify identity, communicate concerns, educate and inform in terms of next steps, and more. This is truly a historic moment in the realm of finance. The UK’s decision to pause payments is actually the first action of its kind and a revolutionary milestone in protecting customers and banks. 

In the face of widespread fraud, it’s time for everyone to move into prevention mode. Regulators can do their part, intervening with other policies designed to safeguard people and institutions. Technology can also be used to put more preventative measures in place. Solutions such as phone-based identity verification and access to real-time risk and behavioral signals have never been more essential. 

Enlisting Prove in the Fight Against Fraud

For banks to get the most out of this measure, they’ll need to be able to strengthen their ability to detect potentially fraudulent activity. When it comes to identity verification, more reliable indicators than social security numbers, passwords, and security questions should be put to use. There are better ways to verify. For example, phone signals, such as call duration, call direction, and whether a call is still in session, have also proven to be very useful in predicting if a scam victim is being convinced to send money to a mule account. 

That’s why Prove uses machine learning, cryptographic authentication, and advanced, phone-centric technology. Specifically, Prove uses its unique PRO Model (Possession, Reputation and Ownership), where the phone is confirmed to be in the possession of the user at the time of the transaction. Next, they flag any risky changes or suspicious behaviors that might exist on their accounts that jeopardize their reputation, such as recently changed SIM cards. Finally, Prove ensures the customer’s ownership of the phone number is accurate and that the phone has not been taken over by bad actors.

Prove’s technology introduces greater speed and reach thanks to real-time detection and scale. Machine learning is used to identify and weigh signals in a pre-production environment to tune the accuracy of our reputation metric. Once the signals and weights have been set, the algorithm is put into production.

For example, fintech solution Spark Wallet leveraged Prove to detect and block bot traffic based on their risk appetite level. Spark Wallet has seen a 100% reduction in bot attacks since implementation. For Spark Wallet, one of the main benefits of being able to mitigate bot fraud is that funds that would have been lost to fraud can be used for growing the business and providing more rewards and incentives to Spark Wallet’s customers.

The Role of Advanced Identity Authentication in Combating Scams

The rapid proliferation of fraud is a serious, damaging, and costly issue. However, when institutions are equipped with the right identity verification and authentication tools and the luxury of time, there’s much that can be done. The UK’s new, historic measure is a great example and hopefully represents a tipping point in legislative actions around the world. Having more time to pause and access cutting-edge technology that investigates suspicious payments or has the ability to access real-time data, signals, and insights can tip the scales back in favor of consumers and banks. Scams are rising — to win the fight, we must have time and advanced fraud detection technology on our side.

Addressing the challenge of digital scams hinges on seamlessly embedding identity authentication into the user journey. It's crucial for users to have confidence in the platform's security and efficacy, a trust that can be cultivated through rigorous and dependable verification processes. These measures not only guarantee secure access but also cultivate trust in every digital interaction.