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Report: Scam phone calls up 30%

Maria Korolov | June 18, 2015
Phone fraud aimed at finance and retail companies rose by 30 percent last year, according to a new analysis of several million calls by Pindrop Security. In addition, the company reported over 86 million scam calls a month to U.S. consumers.

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Phone fraud aimed at finance and retail companies rose by 30 percent last year, according to a new analysis of several million calls by Pindrop Security. In addition, the company reported over 86 million scam calls a month to U.S. consumers.

"We assume that the increase of fraud on the phone channel is correlated with the increasing presence of security mechanism on the online channel," said Pindrop Head Researcher David Dewey. "People are starting to protect their websites, PCI is becoming effective -- but the phone channel remains completely unguarded."

Next year, as U.S. retailers switch their point-of-sale terminals for more secure systems, card-present fraud will become even more difficult and Pindrop predicts even higher rates of fraud at call centers.

Credit card processors had the highest rate of fraudulent phone calls, overall, with one out of every 900 calls coming from a scammer.

According to Dewey, scammers start with personal identifying information or credit card numbers. Major breaches like those at Target and Anthem put more and more of this data into the hands of the bad guys. They then trick call center employees into giving them even more information, or impersonate the victim, steal money, or purchase products.

Retailers selling popular, expensive Apple products that can be easily resold on Craigslist or eBay were particularly favorite targets, he said. Fraud rates, in some cases, were as high as one out of every 300 calls.

On the other hand, these retailers often have an advantage over financial institutions in that they typically have some time before shipping their product, time they can use to investigate and cancel suspicious orders.

In addition, scammers rarely try to max out a stolen credit card to avoid drawing attention to themselves. As a result, while the average call exposes a retailer to $2.40 of potential risk, the actual average fraud loss is only $0.17 per call.

Pindrop could not estimate the numbers for actual fraud loss at financial institutions because it's hard to trace back a particular theft to a specific phone call. However, based on the volume of fraudulent calls, the average brokerage is exposed to $15 million in potential fraud each year, the average credit card company to $11 million, and the average bank to $7.6 million.

Some attackers are going even further, with sophisticated, multi-step phone attacks. For example, they might first call the consumer directly, impersonating their credit card company and offering lower rates -- and tricking victims into giving up even more information.

According to the Pindrop report, there were 330,000 complaints about this scam just in the past six months.

 

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