You know that feeling of disconnection you felt during the pandemic? That was gold for the scammers.
This is because the distance between you and your employer, financial institution, insurer, or just about anything else is a scammer’s sweet spot. And that zone expanded dramatically during the pandemic lockdown, said Michael Skiba, a security consultant who has worked with the United Nations and federal agencies, also known as Dr. Fraud.
“I operated in the fraud industry for 28 years,” Skiba said at a session for the National Association of Insurance Commissioners Insurance Summit 2022. “I have never seen such a change in the world in which I operate.”
Insurance companies and banks, slow to change over the previous decades, had to quickly adapt to a contactless world where verification was more difficult, just when consumers expected more convenience. But Skiba said that comfort has an inverse relationship with safety: when one goes up, the other goes down.
A key component could be in your hand right now. The number of connected devices — phones, laptops, watches, just about anything in your house — has skyrocketed in recent years. In 2018, there were 15 billion connected devices in the world; by 2020, 50 billion.
As companies went after consumers, they outpaced regulators’ ability to catch up. Phones make it more difficult to tell who an email is from at a glance, where the reader might not spot a misspelling in the supervisor’s title when that would have jumped out at the reader on a laptop. That facilitates “spear-phishing,” when a scammer impersonates a trusted sender to ensnare prey via email. Successful spear-phishing campaigns average a loss of $1.6 million per business. Approximately 85% of people have experienced a phishing attempt at least once.
Skiba noted that as people attended his session in the Kansas City meeting room, data swirled around them, even if they weren’t using their phones.
“When there is so much data,” Skiba said, “every piece is an opportunity for fraud.”
The cyber world makes it difficult for companies to know their customer. Businesses can fall victim to ghost fraud, where someone takes on the identity of a dead person, or synthetic fraud, where someone creates a person out of thin air. Gone are the days when a bank required meeting the customer across a desk.
Those days are not coming back. As an example, Skiba pointed out that most of us get used to ordering food on an app. At first it was difficult, but even his mother understood: “even Venmos!”
That’s the new base. So what can companies do about it? Not for leaving the bear behind.
Skiba told a story about a visit to Vlad the Impaler’s castle. But the road to the castle was cordoned off with police tape because a visitor was mutilated by a bear the day before. A woman at the foot of the road said that Skiba’s group could take the road but they would not need to outrun the bear, but be faster than the next one.
Old joke, yes, but your point is that scammers are looking for the latecomers, the easy marks. Make it a little difficult and they’ll move on to the easiest prey.
“I’ve never seen a case where the scammer decided to overtake slow runners and go for the star of the track,” Skiba said, adding that there are simple ways for companies to toughen up. “We’ve seen so many cases where you just put a little bit of caution, a little bit of push back in different areas, whether it’s asking them to fill out a form, asking them to go on a call, asking maybe to fill out a couple more documents, No matter what it is, if you make it a little harder, they’ll go somewhere else.”
Another suggestion was to create a connection even in the digital world. When individuals deal with faceless companies, it is easier to justify cheating on corporate monoliths. But Skiba said he remembers his local insurance agent growing up, Andy Martin, a Little League coach and a regular around town. Skiba didn’t even know what his insurance company was: it was Andy.
“I wouldn’t even think of letting Andy Martin down. It would never cross my mind, even if the opportunity presented itself. I met Andy Martin, he was personal to me,” Skiba said. “What you are seeing now is that there are no more Andy Martins, right? Everything is online.”
Skiba said the key is to create a face, a personality that consumers can relate to. At least create one person who can outrun the competition when the bear is on the hunt.
Steven A. Morelli is a contributing editor for InsuranceNewsNet. He has more than 25 years of experience as a newspaper and magazine reporter and editor. He was also vice president of communications for an association of insurance agents. Steve can be contacted at [email protected]
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