Bank Scams: What it is, how to prevent it & the different types

Understanding bank fraud

Bank fraud involves illegally acquiring money, assets or sensitive information through deception, manipulation or other illicit means. Fraudsters often target individuals to steal personal and financial information to access their accounts. Usually, these nefarious actors have several tricks up their sleeve. One common approach is using phishing scams to trick customers into handing over sensitive details.

They also employ social engineering tactics that manipulate you into voluntarily compromising your security. Without a doubt, the consequences of these malicious activities can be devastating. They lead to significant financial loss, damage to your credit score, and a long, complicated recovery process.

Common types of bank scams

Integrating technology in banking has brought immense conveniences and opened new avenues for fraudsters to exploit. Bank scams have evolved, becoming more sophisticated and harder to detect. The common types of bank scams fraudsters use to compromise your financial security include:

Phishing scams

Phishing scams are one of the prevalent methods scammers deploy to access your personal and financial information. Fraudsters send emails or texts that appear to be from reputable sources, such as your bank. In the message, they ask you to verify personal information or click on a link. The link often directs you to a fake website that mimics your bank’s official site. On the phony site, you’re prompted to enter sensitive details like your login credentials, social security number, or credit card information. Once entered, this information goes directly to the scammers.

Vishing scams

Vishing, or voice phishing, operates on a similar premise to phishing scams but is conducted over the phone. Vishing employs phone communication as a strategy to trick people into disclosing confidential information, often by impersonating a banking professional, frequently for financial gain (Brabin & Bojjagani, 2023). They inject a sense of urgency or fear to coax you into divulging sensitive information. For instance, they might claim your account has been compromised and that immediate action is required to secure it, asking for account numbers, passwords, or other personal details, which they can use to access your account. 

Spoofing scams

Spoofing is a deceptive tactic used in cyber fraud where scammers falsify electronic communications to appear as if they're from trusted sources. This includes forging email headers and caller ID information to trick recipients into disclosing sensitive information or clicking on malicious links. Vigilance and verifying the authenticity of communications are crucial to avoid falling victim to spoofing scams.

Wire transfer scam

In wire transfer scam cases, scammers insert themselves in conversation, for instance, pretending to be an attorney or executive. Often, they will alter bank details, asking you to send funds to the illegitimate account. Or they will post fraudulent adverts online offering services like vacation rentals. Once you wire the money, the scammer gains possession immediately, making it difficult to recover the funds.

Card skimming

Card skimming involves the unauthorized capture of credit or debit card information. Scammers install small devices on ATMs, gas pump card readers or point-of-sale systems that read and store your card’s magnetic stripe data when you swipe it. With this information, they can clone your card or make unauthorized purchases online. Most financial institutions do not hold you liable for this type of fraud.

Identity theft

In identity theft scenarios, scammers gather enough personal information about you to impersonate you in financial transactions. They might open new credit card accounts, apply for loans or even file for government benefits in your name. Identity theft can occur through stolen mail, data breaches or collecting information from social media profiles.

SIM swap scams

Fraudsters activate a new SIM card linked to your phone number, transferring your calls, texts and potentially one-time passcodes to their device. This allows them to bypass security measures for banking and other services.

How scammers access your bank account

Scammers have developed multiple strategies to breach bank accounts:

• Social engineering: This involves manipulation to break normal security procedures. It’s often combined with phishing, vishing or creating a fabricated scenario to steal your data. It is one of the most common approaches in elderly scams since they are vulnerable to manipulation.
• Malware and ransomware: Malicious software is installed on your device without your knowledge, allowing scammers to track your keystrokes or directly access your banking information.
• Exploiting public information: Scammers use information available online (e.g., through social media) to guess passwords or answer security questions, gaining unauthorized access to accounts.
• Data breaches: Large-scale hacks can expose the personal and financial data of millions of users, which scammers purchase or find online to commit fraud.

Tips on how to prevent bank fraud

Preventing bank scams requires vigilance and proactive measures. Here’s how to prevent bank fraud.

1. Enhance your cyber hygiene: Update your computer and mobile devices’ security software regularly. Use antivirus and anti-malware solutions and keep your operating system current to protect against vulnerabilities. Also, avoid using online or mobile banking on open Wi-Fi networks since scammers can intercept your login credentials or sensitive data.

2. Use strong, unique passwords for each account: Incorporate a mix of letters, symbols and numbers, and avoid using guessable information like common words or birthdates. Also, consider a password manager to keep track of your passwords.

3. Enable two-factor or multi-factor authentication (2FA or MFA): Two-factor authentication enhances protection by demanding two forms of verification from users: a known element (such as a password) and a possessed item (such as a mobile phone). Multi-Factor authentication demands three or more forms of verification. These approaches ensures secure access to services, including online banking and ATM transactions (Aloul, Zahidi, & El-Hajj, 2009).  Advanced features like facial recognition and fingerprint login add an extra layer of security.

4. Educate yourself on the latest scams: Stay informed about new and evolving money scams. Banks, cybersecurity firms, and government agencies like the FBI often publish information on the latest threats.

5. Be skeptical of unsolicited requests: Whether it’s an email, call or text, always verify the authenticity directly with the institution through official channels before providing any information. When in doubt, contact whoever is reaching out to you directly to verify.

6. Monitor your accounts regularly: Check your account activity and bank statements frequently. Early detection of unauthorized transactions can minimize damage and swiftly resolve fraud issues. Set custom alerts so that your bank notifies you about transactions on your account. 

7. Secure your personal information: Shred sensitive documents before throwing them away, secure your mailbox and be cautious about the personal information you share online.

8. Report suspicious activity immediately: The last tip concerns what to do if you have been scammed online. Contact your bank immediately if you suspect you’ve been targeted or victimized by a scam. Quick action can help protect your funds and potentially assist in catching the fraudsters.

9. Know what your financial institution will not ask for: Your financial institution will never ask for your full social security number, pin number, online banking login information or to put your card into a mailbox to be picked up.

Ent Credit Union's approach to bank fraud protection

Ent Credit Union, in partnership with NXG Strategies, a leader in identity theft recovery services, offers a comprehensive program known as Ent Protect. Here’s a closer look at how Ent Protect safeguards against fraud.

• Credit monitoring: Ent Protect offers continuous surveillance of members’ credit reports, alerting you of new inquiries, accounts opened in your name or other changes that could indicate fraudulent activity.
• Dark web monitoring: Fraudsters and hackers sell stolen personal and financial information on the dark web. Recognizing this, Ent Protect scans these hidden corners of the internet. If a member’s personal information is detected on the dark web, they are immediately alerted.
• Opt-out services: Ent Protect offers resources to opt out of telemarketing calls, pre-approved credit card offers and commercial mail. These opt-out services minimize the chances of identity theft and fraud.

Besides Ent Protect, our online and mobile banking solutions have biometric logins that require a fingerprint or face ID. We also provide educational resources on how to prevent bank fraud and avoid scams in our security center online. 

FAQs

What are the most common types of bank fraud?

Common scams include phishing, wire transfer scams, identity theft, card skimming and various forms of deception where scammers impersonate banking institutions.

How can I tell if I’m being targeted by a banking scam?

Signs include unsolicited requests for your personal or banking information, suspicious emails or phone calls claiming to be from your bank and unauthorized transactions on your account.

Can scammers access my bank account without my knowledge?

Yes, through methods like phishing, malware, or exploiting data breaches, scammers can access your account without your immediate knowledge. Regular monitoring, transaction alerts and security features like Ent Protect that detect fraud are essential for prevention.

How does Ent Credit Union protect its members from bank scams?

Ent Credit Union employs advanced security technologies like biometric logins and Ent Protect. We also educate members about fraud prevention, monitor accounts for suspicious activity and provide dedicated support to address concerns related to bank fraud.

Resources

• Aloul, F., Zahidi, S., & El-Hajj, W. (2009). Two factor authentication using mobile phones. 2009 IEEE/ACS International Conference on Computer Systems and Applications, 641-644. https://doi.org/10.1109/AICCSA.2009.5069395.
• Brabin, D., & Bojjagani, S. (2023). A Secure Mechanism for Prevention of Vishing Attack in Banking System. 2023 International Conference on Networking and Communications (ICNWC), 1-5. https://doi.org/10.1109/ICNWC57852.2023.10127561.