Using Friction To Fight Fraud

Most scams and frauds are made-up of two separate parts. Tricking the victim, and moving the money. And it’s the second part that we exercise far more control over than we think.

That’s where words like anomaly and friction can be the customer’s best friend. Most times when criminals try to move money either in or out of an account, it’s creating an anomaly. Something that’s not typical for that account.

That anomaly could be the size of the transaction, the number of sudden transactions, an international wire transfer for the first time ever, inexplicable account access from a foreign IP address, the involvement of newly created accounts and so on. All tell tales well known to the financial industry.

In the case above of the 90-year-old victim mentioned above, not once in her long life did she move $600,000 from her retirement account to her checking account. That was the anomaly of all anomalies, and extremely easy for her financial institution to spot and intervene.

That intervention is the friction and the source of contention with so many financial institutions. But if these institutions can explain to their customers why slowing transactions down, so they can simply double check and verify first, it could be a very simple fix for many crimes.

There are lots of different ways we can fight these scams, and paying greater attention to anomalies, and more importantly responding quickly to them, is one simple thing we can start doing now.