Compliance Journal November 2023
Special Focus Recent Fraud Trends as Reported by WBA Financial Crimes Committee Data released by the Federal Trade Commission earlier this year shows that consumers reported losing nearly $8.8 billion to fraud in 2022, an increase of more than 30 percent over the previous year. Those are sobering numbers, and WBA’s Financial Crimes Committee would be quick to point out that figure only includes fraud that was reported. The WBA Financial Crimes Committee is comprised of fraud officers, risk managers, and security specialists. The Committee serves to inform and educate the Wisconsin banking industry, law enforcement, and the general public on the changing security and criminal threats to the financial sector and develops solutions to those threats. In that role, the group has put together this article to report on the most common fraud trends seen in Wisconsin. While this article will discuss three of the most common fraud schemes shared by the Committee, the group also shared that there are some general fraud trends to be aware of as well. Primarily, fraudsters are becoming increasingly adaptive in their behavior. As technology, methods of business, and commerce continue to develop, fraudsters are continually developing their methods to become more and more convincing. In this way, the group stresses the importance of monitoring those tactics through the tools available such as through Financial Crimes Enforcement Network (FinCEN) alerts, news sources, and information sharing. Felony Lane Gang The “felony lane gang” is a term used to refer to a group of organized criminals and gets its name from their methods. While this group is not new, they have been active again in Wisconsin recently. The group travels across the country and recruits individuals for smash-and-grab petty thefts which are then developed into larger schemes. They will steal cash, checks, and personal identifying cards such as driver’s licenses, credit cards, and debit cards. They then impersonate those individuals to conduct fraudulent transactions. This group gets their name from their common strategy of targeting banks through use of the far drive-up lane to make positive identification more difficult. This scheme can often be difficult for both law enforcement and banks to identify. The actors will typically use late model vehicles, often rented, with stolen Wisconsin license plates. They will dress the part, often wearing wigs and costumes to resemble the individual whose identity they have stolen. Being aware of typical security questions, they will have two forms of identification available. Individuals may often appear anxious or rushed if confronted, or if the individual cannot accurately answer security questions. They also typically only visit branch locations out of the area of the customer’s address or typical activity to avoid being spotted. Also look out for their second form of identification, which may have been previously closed or hot-carded (e.g., a debit or credit card previously issued). The Committee recommends encouraging customers to report loss of access devices, account information, or other identifying information. Then, a system notification or warning to a relationship profile can be added to flag any potential felony lane gang activity. Staff should be encouraged to compare the likeness of the person conducting the transaction to the identification presented. Often, the actors will wear covering garments, such as sunglasses, hats, cowls, and coats to make this more difficult. Depending on branch locations and overall risk tolerance, a bank might also consider establishing additional identification procedures, perhaps for transactions that exceed a certain dollar amount. WBA’s Financial Crimes Committee has reported that while it’s most common to see actors use drive-up lanes to commit fraud, they have been known to enter a branch lobby as well. The Committee encourages banks to follow their procedures on suspicious transaction activity to minimize losses.