How to avoid becoming a victim of financial scammers: advice from an economist

For the last few years, starting in 2019, the Bank of Russia has been publishing statistics characterizing what is happening in our country with cyber fraud in the financial sector. There is also a regularly updated section on the Bank of Russia website “Countering Fraudulent Practices”. I strongly recommend everyone to go there and take a look: very useful information. After all, many citizens have either already encountered various types of financial fraud or are at risk of encountering them in the near future.

Of all the types of cyber fraud, we are probably most familiar with telephone fraud. But what is going on overall? Are there more or fewer offenses in this area? What are the trends here, and why is it important to know them?

In economics in general, trends mean much more than just some indicators characterizing this or that phenomenon, as they say, in the moment. Knowing the dynamics and indicators in retrospect, you can predict with greater confidence what will happen in the future, better understand the ongoing processes, because indicators in dynamics force you to look for an answer to the question of why things happen this way and not otherwise.

So, if you look at the indicators characterizing financial cyber fraud published annually by the Bank of Russia and compare them over a number of years, then you can identify a number of important trends.

Let’s start with the indicator “Volume of transactions without consent.” The name of the indicator speaks for itself: so, if funds were transferred from your card, and you had nothing to do with it, then this is precisely an operation without your consent. Of course, transactions without consent can occur not only with bank cards. These are transactions on accounts (without using cards), transactions through the fast payment system, through electronic wallets, and even without opening an account.

In 2023, the volume of transactions without consent, according to the Bank of Russia, amounted to 15.8 billion rubles – the highest figure since 2019 (then it was 6.4 billion rubles). It would seem a huge amount, a bill of tens of billions. However, it is important that the share of the volume of transactions without the consent of clients in the total volume of money transfer transactions was only 0.00119%. You understand that this is negligible. However, the corresponding trend today is negative (share in 2022 0.00097%). This means that it is impossible to be completely calm about the growing number of transactions without consent. Absolutely not!

We look at the following indicator: “Share of social engineering in operations without consent.” Social engineering is when attackers come into contact with you, persuasion, threats and other methods to ensure that a fraudulent transaction is completed. In 2019, the share of social engineering in operations without consent was 68.6%; in 2021–2022, this figure was already at 50%. Is it good or bad? On the one hand, it’s good, since people have begun to succumb to this very social engineering to a lesser extent, on the other hand, it’s not good, because it turns out that even without social technologies, by improving purely technical methods, more money can be stolen.

Now about the trend in the indicator “Fraudulent telephone numbers identified by the Bank of Russia”. The dynamics of this indicator until 2022 were simply threatening. Judge for yourself: if in 2019 the Bank of Russia identified 14.2 thousand fraudulent phone numbers, then in 2022 there were already 756 thousand. That is, there was not just an increase, but a jump of 53.2 times! However, the figure for 2023 is 575.7 thousand fraudulent phone numbers. And this is already noticeably less compared to 2022. However, there is no need to calm down: there are still a lot of phone scams. So, citizens, be vigilant: calls from “bank security specialists”, “law enforcement agencies”, “Central Bank” and other “important authorities” will not stop soon. Let’s hope that the decrease in fraudulent phone numbers that was recorded last year will develop into a sustainable trend.

Finally, the indicator “Blocking of fraudulent Internet resources initiated by the Bank of Russia.” If in 2019 there were 8.4 thousand, then in 2023 there were only 3.6 thousand. It is obvious that the joint work carried out by the Bank of Russia and the Ministry of Digital Development of Russia is bearing fruit: there are many times fewer fraudulent Internet resources.

Once we have an understanding of what we have going on with cyber fraud in the financial sector, it is important to understand the negative impacts it has on the economy. This will help answer the question of why it is important to combat this type of fraud from a macroeconomic point of view.

With people, if we take the stories of their “divorces” separately, everything is more or less clear and understandable. And there is and cannot be anything good in the fact that someone’s money was stolen as a result of a scam. In general, this is also not good for the economy. Cyber ​​fraud in the financial sector leads to a decrease in the level of trust in society, an increase in the uncertainty of the economic situation, increased anxiety among people, a decrease in consumer activity of citizens, an expansion of the shadow sector of the economy, and even, I would venture to say, to the discrediting of social engineering methods. The list of negatives listed remains open.

You may ask: if everything is so bad, then why doesn’t it show up much? Because the situation, despite the alarming indicators, remains under control. “Under control” means that, firstly, the identified violations from a regulatory point of view are within the limits that are currently defined for them. Secondly, not only formally, but also in reality, cyber fraud in the financial sector is not widespread.

I think that many will not agree with the statement that everything is not so bad, and certainly those who have directly suffered from cyber fraudsters will not agree. And they can be understood, but this is rather an emotional perception. And judging by the numbers and facts, the situation is indeed still under control. Although some trends, detailed above, are alarming.

Concluding this column, I would like to repeat some of the recommendations of the Bank of Russia, which it constantly tries to convey to people. However, alas, not everyone gets it for one reason or another.

And further. For most of us, money doesn’t come easily, it doesn’t fall from the sky, but is truly earned through hard work. And it can be oh, how annoying it is when sometimes this money is siphoned into the pockets of scammers. It shouldn’t be this way, of course. Therefore, as the Bank of Russia recommends, do not tell anyone your financial information: bank card details, three-digit code on the back of the card or SMS code. Remember that employees of banks and government agencies never request such information. Do not store card details and PIN codes on your computer or smartphone. And I’ll also add on my own: if you do this, then encrypt this information so that only you know this code. But remember that there will be a problem if you forget it. This problem will eventually be solved, but it will take some suffering.

If they call you from an unknown number and offer to transfer money to a special account of the Bank of Russia or something like that, stop the conversation, hang up, call your bank back, and clarify. Remember that your bank is no less interested in preventing customers from becoming victims of fraud. It is clear that the bank’s losses may not be comparable to yours. What if there are many deceived? That’s it.

The effectiveness of these and similar recommendations has been tested by life, do not neglect them. Difficult times in the economy are not over; there will be plenty of people willing to get “left” money during such a period. Take care of your money!