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Scams have become more complex and harder to spot, and that’s because of digital technology. Fraudsters or scam artists are constantly developing new ways to scam people and businesses, leading to what some call a "scamdemic." With phishing emails and fake investments rampant, we must know how these scams work and how to protect ourselves and our businesses against them.
We conducted a poll, showing that 85% of institutions are experiencing scam growth between 10% and 75%, with 64% of banks and 33% of credit unions facing a 50% to 100% increase. This aligns with the FBI's report that scams are the fastest-growing financial crime, making it a critical issue for businesses to address.
A panel of experts—Erin West, Founder of Operation Shamrock, Kitboga, Scambaiter & CEO of Seraph Secure, Paul Raffile, Threat Intelligence Analyst, and PJ Rohall, Co-Founder of About Fraud— shared their knowledge on the tactics used by scammers and how institutions are fighting back. With 14% of organizations seeing a 50% rise in scams over the past year, this session offers insights for those needing to combat fraud.
The Evolution of Scams
Q: What do you think is driving the growth of scams today, especially considering they've been around for so long? What changes have you seen in the evolution of scams?
Erin: I believe scams have always been around, but what we're seeing now is a perfect storm.
During COVID, people became more isolated, and even though things are slowly getting back to normal, there's still a high level of loneliness. This vulnerability makes people trust digital platforms more. When you combine that loneliness with a well-crafted scam targeting both emotional needs and financial desires, like romance fraud or the "pig butchering" scam, it becomes incredibly hard to resist.
These scams tap into people's endorphins and emotions, making them feel loved and hopeful for wealth. The rise of cryptocurrency also plays into this, as it creates a sense of FOMO and offers what seems like a foolproof way to make money. This is, unfortunately, the perfect time for scams to thrive.
Q: What do you think is driving the recent increase in sextortion, particularly among younger populations?
Paul: The increase in sextortion, especially among minors, can mainly be traced back to West African criminals known as "Yahoo boys."
These groups played a big role in financial sextortion cases. When I first encountered them in my career, they ran fake job scams, and their tactics evolved to include cyber fraud and account takeovers. While these criminals are persistent, they're usually not very tech-savvy, and with the right approach, it's possible to stop them and take them off the platforms they use.
In late 2021, Yahoo boys began sharing detailed guides for scams targeting minors, organizing in Facebook groups with 100,000+ members. Also, platforms like Cash App introduced teen accounts, making users more vulnerable to scammers. This led to a huge jump in financial sextortion cases—from 139 in 2021 to over 26,000 in 2023, a staggering 18,000% increase.
Q: What do you see in terms of why we are talking about scams? Why has there been an increase in scams recently?
PJ: The increase in scams can be traced back to how scammers are getting much better at manipulating their victims.
They know exactly how to tap into people’s emotions and psychological triggers, making them believe things they wouldn’t normally fall for. Even though victims may be warned by friends, family, or financial institutions, they still end up falling for these scams because the scammers so heavily manipulate them.
One approach I’ve seen, especially at banks, is bringing behavioral scientists or psychologists to help their fraud teams. For example, JPMorgan Chase hired someone to focus on knowing psychological manipulation in scams. When I worked in fraud, I wasn’t trained to handle the psychological side of things, and neither are most family members. We need experts to show us how to talk to victims and help them recognize the scam without getting defensive.
Even when we spot scams early, it’s often not enough to convince victims that they’re being scammed. This is a tough challenge, and it’s only adding to the increase in scams. It highlights the need for outside experts trained to handle the psychological and emotional manipulation that scammers use.
Q: What do you think is driving the rapid growth and increased sophistication of scams?
Kitboga: The biggest change I’ve noticed is how much more sophisticated and aggressive scammers have become.
When I started, they asked for small things like $500 gift cards. Now, they’re much more professional—they speak your language fluently and can walk you through things like draining your retirement account. These scammers are patient, skilled, and their tactics are much harder to recognize.
Another big reason is the amount of money being stolen. Criminal organizations are reinvesting billions into more advanced scams. This constant reinvestment helps them create even more aggressive and sophisticated methods. Scammers are targeting nearly every industry now—I've seen them impersonating well-known companies to go after publishers and others.
The Role of AI Used by Scam Artists
Q: How are you seeing scammers using AI, especially since the launch of ChatGPT, to make scams more sophisticated and targeted?
Kitboga: Scammers are getting much smarter by using AI, like language models and voice cloning, to make their scams more believable.
For example, they can run emails through AI to fix any grammar or wording issues, making them harder to detect. One of the most worrying things I’ve seen is voice cloning being used in scams like the "grandparent scam." With just a few minutes of recorded audio, scammers can clone someone’s voice so well that she'd probably think it was me if they spoofed my phone number and called my mother.
Q: What can we do to help protect our loved ones and communities from scams?
PJ: To protect our loved ones and communities, we need a hands-on approach.
Get involved in local schools or community groups like PTO meetings or Cub Scouts. I recently spoke with my son's Cub Scout troop, and one child asked, "Why don’t we learn about this in school?" It made me realize that while we teach kids about physical health, digital safety, and scams are just as important and need more focus.
You don’t need big presentations—just have simple conversations at social events or family gatherings. Share what you know in a way that’s easy to understand and not pushy. Supporting efforts like Operation Shamrock can also help spread the word. Until public figures and agencies catch up, it’s up to all of us to take action and share what we know.
Q: How can we identify if a video is real or a deepfake, especially with AI involved?
Paul: Spotting fake social media profiles or deepfakes is becoming increasingly difficult, even for experienced people.
I recently saw a sextortion account on Instagram that looked completely real. It had been active for years, had real-looking followers, and showed no obvious red flags—until we discovered criminals had hijacked it. With AI, scammers are improving at creating believable content and can easily manipulate photos to match requests.
Criminals can use nudifying apps to alter publicly available photos from social media and extort victims. Some emails have even included images of victims' homes to intimidate them. The next step could be deepfake images from the victim's own online profiles, making it even harder to spot when targeted. AI is making these scams more advanced and harder to detect.
Q: What’s your top advice for helping people recognize if they’re being scammed?
Kitboga: The main thing to remember is that scams often create a sense of urgency—whether it's telling you you've won something or that you owe money.
The trick is to take a step back and not act in the heat of the moment. For me, fraud prevention is key. My team focuses on putting up barriers to stop scammers before they can reach anyone. With my family, I focus on making sure scammers can't even access their devices.
My mom, for example, isn't tech-savvy, so I make sure her environment is secure, so she doesn't have to worry about keeping up with new scams. I always recommend using preventive tools to take the guesswork out of staying protected, especially since scams are always evolving.
How Institutions Can Fight Back
Q: How should FIs balance the need for customer growth with the risk of adding friction to prevent scams, especially when they don’t experience direct monetary loss from these scams?
Paul: To fight scams like sextortion, financial institutions should watch for key red flags.
For example, if a teenager suddenly sends all their money to an overseas account they’ve never used, especially one with a suspicious history, that’s a big warning sign. Account takeovers from high-risk areas like Nigeria, the Ivory Coast, or the Philippines are also cause for concern. Institutions could also adjust how they monitor youth accounts, treating smaller amounts like $100 the same as larger sums for adults to spot suspicious activity.
It’s also important for institutions to train frontline staff to spot signs of distress, especially in teens. Recognizing red flags, like phrases such as "leak your nudes" or "blackmail" on payment platforms, can help identify sextortion cases. Staff should empathize with these situations to ensure victims aren’t further exploited.
Q: How can institutions be incentivized to take scam prevention more seriously from a law enforcement perspective, beyond just doing right by their customers?
Erin: This issue is much larger than just a few people losing money. We're talking about billions being stolen, and these aren't small-time scammers, but organized criminals aiming to weaken economies, especially in the US and UK.
Most scammers are also victims of human trafficking, forced to work under horrific conditions. It's not just about financial loss—it's about people's lives. They need to take this seriously, as the impact is much greater than it might seem at first glance.
Q: How should fraud fighters build mental resilience and handle the emotional toll of dealing with these devastating crimes, especially when the impact goes beyond financial loss and involves people’s lives?
PJ: Fraud prevention can be stressful enough with productivity goals and management pressures. But when fraud fighters also have to support victims who’ve experienced trauma, it adds another layer of difficulty.
They often need to navigate tough conversations, balancing empathy with delivering bad news about financial losses. Companies should provide mental and emotional support through trained professionals. And while it’s tough, open communication within teams and with leadership is key to maintaining mental well-being.
It's crucial to tackle the stigma victims feel after falling for scams. Sharing stories from other victims, particularly those who are educated or accomplished, can help reduce their shame and isolation. By being transparent and offering support to both fraud fighters and victims, we can improve mental well-being and break down harmful stigmas around these crimes.
Q: What tactical steps can institutions take today to slow down scams?
Kitboga: To slow down scams, institutions must focus on prevention and understand that these crimes hurt their customers and their brand.
These criminals are targeting our families and users, and when someone loses their life savings, it damages the institution’s reputation. If a customer gets scammed on a legitimate platform, they’re less likely to return or recommend it to others. Institutions must recognize this impact on customer trust and, ultimately, their business.
PJ: Many social media companies care, especially those in trust and safety roles, but executives often don't provide the resources needed to tackle these issues. Despite some positive steps, like in Australia, there’s still a lack of support from top leaders to make real progress.
Kitboga: I completely agree. There are definitely people fighting hard every day for this, and I know many in this chat are part of that effort. My concern is more about the leadership, which isn’t providing the necessary resources or budget to support these initiatives. That’s where the real challenge lies.
The Takeaway
Education is important, as well as staying updated on the latest scams and ensuring your customers are informed. Enhance transaction monitoring by emphasizing consistent IP addresses, familiar login behavior, and trusted remote connections. Collaboration is also vital, so joining data-sharing networks helps develop better preventative measures.
Fighting financial fraud is a team effort, and those on the frontlines are making a huge impact. While the people they protect may never know it, their work is truly saving lives. Together, we can win this fight against fraud!
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