“Sweetheart” Bank Fraud Makes a Comeback

The sweetheart scam has been around forever; lately it has a decidedly 21st century twist. The new schemes are relying on the prevalence of mobile banking and remote deposit capture. In these schemes the people perpetrating the fraud persuade their victims to provide them with account information, login information, or to open a new account that they can access. With that information the criminals then set up mobile access, usually with remote deposit capture (RDC). Once the RDC is set up they then deposit fraudulent or counterfeit checks and withdraw funds.

There are three main avenues that they use to access the funds: they convince the victim to provide a debit card, ask the victim to transfer funds via wire or remittance, or transfer funds to another online account.

Because banks can be liable for preventing fraud, even when it’s the result of poor decision-making by a customer, you should make sure that your behavior monitoring procedures and alert systems are all up-to-date. Thus far behavior monitoring is the most effective way for banks to ensure that they can detect fraud and protect themselves and their customers from scams.

Another valuable tool in combating fraud and scams is customer education. By putting forth the effort to make sure your customers are educated about threats and prevention you can lessen the likelihood of losses for both your customers and your bank.

Don’t let the “sweetheart” scam impact your customers or your bank. If you have any questions about what you can do to protect your institution call ITPAC today.