Will The US Embrace The UK Contingent Reimbursement Model To Fight Online Scams Losses?
Online Scams And Your Bank
According to Thompson Reuters:
Online scams threaten thousands of Americans each year, and US regulators and financial institutions should pursue new methods to better fight these scams and bring relief to victims
Online scams are growing at an alarming rate, impacting consumers financially and emotionally. The impact of these scams is so significant, that there are cases of post-traumatic stress disorder (PTSD) and even suicide.
Total losses from online scams and identity theftIdentity Theft Identity theft is when someone uses another person's personal identifying information, without their permission, to commit fraud or other crimes. In both the U.K. and the United States it is the theft of personally identifiable information. Identity theft deliberately uses someone else's identity as a method to gain financial advantages or obtain credit and other benefits, and perhaps to cause other person's loss. The person whose identity has been stolen may suffer adverse consequences, especially if they are falsely held responsible for the perpetrator's actions. Personally identifiable information generally includes a person's name, date of birth, social security number, driver's license number, bank account or credit card numbers, PINs, electronic signatures, fingerprints, passwords, or any other information that can be used to access a person's financial resources. reported to the Federal Bureau of Investigation (FBIFBI FBI - Federal Bureau of Investigation The Federal Bureau of Investigation (FBI) is the domestic intelligence and security service of the United States and its principal federal law enforcement agency. Operating under the jurisdiction of the United States Department of Justice, the FBI is also a member of the U.S. Intelligence Community and reports to both the Attorney General and the Director of National Intelligence. A leading U.S. counter-terrorism, counterintelligence, and criminal investigative organization, the FBI has jurisdiction over violations of more than 200 categories of federal crimes, including financial fraud.) have increased to $10. 3 billion in 2022 from $6.9 billion the year before, according to the FBI Internet Crime Complaint Center report, and it is estimated that that numbers are much higher because less than 7% are assumed to report to any authority due to shameShame Shame is an unpleasant self-conscious emotion typically associated with a negative evaluation of the self; withdrawal motivations; and feelings of distress, exposure, mistrust, powerlessness, and worthlessness. and embarrassment. One type of crime that is growing significantly is cryptocurrency investment scamInvestment Scam When a caller claims to have a promising investment opportunity that will help you get rich quick, it's likely a scam., which climbed an alarming 183% to $2.57 billion in 2022 from $907 million in 2021.
With these monetary losses skyrocketing, one question arises: Who is protecting consumers? Many claim that this is a matter of personal responsibility, but with the alarming growth in losses, the societal impact of these scams is yet to be truly measured. Law enforcement and the FBI might investigate some cases, but the recovery possibilities are extremely limited once the money ends up in the hands of the criminals.
Of course, financial institutions hold some liability when it comes to fraudulent transactions, but the liability to reimburse customers only happens in the case of account takeoverAccount Takeover Account Takeover (ATO) are the unauthorized access of a user’s account in order to steal identity credentials, execute a fraudulent transaction or engage in varying types of abuse. fraudFraud In law, fraud is intentional deception to secure unfair or unlawful gain (money or other assets), or to deprive a victim of a legal right. Fraud can violate civil law (e.g., a fraud victim may sue the fraud perpetrator to avoid the fraud or recover monetary compensation) or criminal law (e.g., a fraud perpetrator may be prosecuted and imprisoned by governmental authorities), or it may cause no loss of money, property, or legal right but still be an element of another civil or criminal wrong. The purpose of fraud may be monetary gain or other benefits, for example by obtaining a passport, travel document, or driver's license, or mortgage fraud, where the perpetrator may attempt to qualify for a mortgage by way of false statements. A fraud can also be a hoax, which is a distinct concept that involves deliberate deception without the intention of gain or of materially damaging or depriving a victim., or unauthorized transactions. In this scenario, criminals will use an array of tactics such as stolen credentials or malwareMalware Short for "malicious software," this term means computer viruses and other types of programs that cybercriminals use to disrupt or access your computer, typically with the aim of gathering sensitive files and accounts. to login to the legitimate customer’s account or take over an existing online banking session.
In the United States, Regulation E (Reg E), which was issued by the Federal Reserve as an implementation of the Electronic Fund Transfer Act of 1978, determines the conditions under which financial institutions will reimburse their customers for unauthorized electronic transfers. While several clarifications have been issued over the years to outline specific cases for online banking and debit card activity, one thing remains clear — If a customer performed an authorized transaction even if they were manipulated to do so by a scammerScammer A Scammer or Fraudster is someone that engages in deception to obtain money or achieve another objective. They are criminals that attempt to deceive a victim into sending more or performing some other activity that benefits the scammer., they will not be covered under Reg E and the bank will not be liable to reimburse customers. Given the amounts of money lost to scams such schemes as romance scams, investment scamsInvestment Scams When a caller claims to have a promising investment opportunity that will help you get rich quick, it's likely a scam., bank impersonationImpersonation An impersonator is someone who imitates or copies the behavior or actions of another. There are many reasons for impersonating someone, such as: part of a criminal act such as identity theft, online impersonation scam, or other fraud. This is usually where the criminal is trying to assume the identity of another, in order to commit fraud, such as accessing confidential information or to gain property not belonging to them. Also known as social engineering and impostors. scams, and many others, and the implication of billions of dollars leaving the U.S. every year to illicitillicit Illicit means something that is not legally permitted or authorized under the law; unlicensed; unlawful. It can also mean disapproved of or not permitted for moral or ethical reasons. actors based in foreign countries, there is a need to take action.
Interestingly, there are several activities happening with numerous federal agencies pushing to do more around scams, such as the Federal Communications Commission (FCC) to take more action in detecting scamScam A Scam is a confidence trick - a crime - is an attempt to defraud a person or group after first gaining their trust through deception. Scams or confidence tricks exploit victims using their credulity, naïveté, compassion, vanity, irresponsibility, or greed and exploiting that. Researchers have defined confidence tricks as "a distinctive species of fraudulent conduct ... intending to further voluntary exchanges that are not mutually beneficial", as they "benefit con operators ('con men' - criminals) at the expense of their victims (the 'marks')". A scam is a crime even if no money was lost. text messages, and the Federal Trade Commission (FTCFTC The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) U.S. antitrust law and the promotion of consumer protection. The FTC can also act as a clearinghouse for criminal reports sent to other agencies for investigation and prosecution. To learn more visit www.FTC.gov or to report fraud visit ReportFraud.FTC.gov) pushing social media and video platforms to address the surge in scams.
Embracing the Contingent Reimbursement Model
One interesting example of a model for scam loss reimbursement can be taken from the United Kingdom. The Contingent Reimbursement Model (CRM) was introduced in May 2019 in the U.K. in the form of an initiative designed to reimburse victims of authorized push payment fraudAuthorized Push Payment Fraud Authorized Push Payment Fraud (Scams) occurs when a fraudster manipulates a genuine customer into making a payment to an account they control. There are a variety of types of authorized push payment fraud, including romance scams, invoice scams and a handful of others. (APPPush Payment An Authorized Push Payment (APP) refers to a type of financial transaction that involves the transfer of money from one bank account to another, initiated by the account holder or an authorized party. It typically occurs through the use of mobile banking apps, online payment platforms, or other electronic means. In an APP, the account holder provides explicit consent or authorization for the payment to be made. This distinguishes it from unauthorized or fraudulent transactions, where the account holder is unaware of or did not give consent for the payment. APPs are commonly used for various purposes, such as paying bills, making purchases, transferring funds to friends or family, and settling financial obligations. They provide a convenient and efficient way to transfer money electronically, eliminating the need for physical cash or paper-based payment methods. It's worth noting that while authorized push payments are generally legitimate transactions, there can be instances of scams or fraudulent activities where individuals are tricked into authorizing payments unknowingly or under false pretenses. It is important to exercise caution and verify the authenticity of requests before authorizing any APP. fraud). This is a voluntary code that can be used by banks which agree to participate in the initiative.
Since its launch in 2019, the CRM has been successful in providing a more streamlined and efficient way of compensating victims of APP fraud. In fact, a total of almost 50% of reported scam losses have been reimbursed to victims of APP fraud under the CRM between the first half of 2020 and the second half of 2022, according to the latest figures released by U.K. Finance. This represents a significant increase compared to the previous reimbursement models, which often resulted in remaining financial losses to the victims. Under the CRM, the customer’s bank will reimburse the customer and take loss liability.
Unfortunately, the U.S. banking sector has been focused on an extremely narrow section of scams that has caught headlines, which is fraud on the Zelle payment platform. There has been a significant increase in Zelle fraud due to the nature of Zelle being a faster payment person-to-person network, with the money being transferred immediately to the beneficiary. Indeed, scams increased more than 250% to more than $255 million in 2022, compared to more than $90 million in 2020, according to a report released by Sen. Elizabeth Warren (D-Mass.) in October 2022.
From April to November 2022, Sen. Warren pushed the operators of Zelle — Early Warning Services, which itself is owned by a number of large U.S. banks — to provide numbers and explain their plan to reimburse customers and provide better protection. In November 2022, the seven banks that own Zelle started to work on a rule change that will require the network’s member banks to compensate customers who fall victim to certain kinds of scams. The shift would reverse the network’s current policy, which typically leaves customers with the losses on any Zelle transactions that the customers initiated themselves — even if they were tricked into sending their cash to a criminalCriminal A criminal is any person who through a decision or act engages in a crime. This can be complicated, as many people break laws unknowingly, however, in our context, it is a person who makes a decision to engage in unlawful acts or to place themselves with others who do this. A criminal always has the ability to decide not to break the law, or if they initially engage in crime to stop doing it, but instead continues..
Under the planned rules, if the banks determined that a customer had been deceived into sending money, the recipient bank — the one holding the scammer’s bank account — would be responsible for returning the money to the victim’s bank. That bank would then refund its defrauded customer.
This announcement is a huge change and brings a wave of optimism; however, there are many issues with the proposed reimbursement model. First, it is still unclear which cases will be reimbursed. The news of the proposal model has also received pushback by smaller banks that claimed that they cannot afford to pay for customer scam losses on Zelle, and they might need to leave the Zelle network if this rule will be reinforced, driving more competitive challenges for smaller banks. In addition, and perhaps most obvious, although Zelle scams are skyrocketing, we see other scam vectors growing significantly in which transfers to criminals are not conducted on the Zelle payment platform.
Clearly, the industry needs a more holistic approach to protect consumers who are losing money in growing amounts, especially since Zelle fraud is a comparative drop in the multi- billion-dollar ocean of similar financial scams.
So, to answer the original question: Could the U.K.’s CRM model be deployed in the U.S.? It seems like the Zelle liability initiative that was taken to address a very isolated issue might quiet broader conversations for the time being. However, with the sophistication of the banking ecosystem in the U.S. and the many stakeholders that would need to get involved, it is highly unlikely that this model will be implemented in the U.S. as a voluntary measure.
There is a broader ecosystem that needs to take more responsibility across the scam lifecycle, starting with telecom companies and social media platforms, which facilitate communication, and then onto the banks which enable these illicit transactions.
There definitely should be more collaboration and data-sharing across sectors, and that should be facilitated by the government. At a minimum, banks should take better care of their customers by erecting stronger controls to prevent scams and drive better awareness of these schemes.
We believe that the answer is an absolute yes! Banks need to feel the pain of online scams along with the customers and make them whole as much as possible, through regulation as needed.
Only when the banks share in the risk of online scams will meaningful changes take place that better protect their customers.
Of course, this means that some customers who are completely under the control of the criminals in their online scams will not be happy, but if it prevents a small fraction of these crimes, it is worth it!
Do You Need Support?
Get It Now!
SCARS provides the leading Support & Recovery program for relationship scamRelationship Scam A Relationship Scam is a one-to-one criminal act that involves a trust relationship and uses deception & manipulation to get a victim to give to the criminal something of value, such as money! Click here to learn more: What Is A Relationship Scam? victims – completely FREE!
Our managed peer supportPeer support Peer support occurs when people provide knowledge, experience, emotional, social or practical help to each other. It commonly refers to an initiative consisting of trained supporters and can take a number of forms such as peer mentoring, reflective listening (reflecting content and/or feelings), or in a support group. Peer support is also used to refer to initiatives where colleagues, members of self-help organizations and others meet, in person or online, to give each other connection and support on a reciprocal basis. Peer support is distinct from other forms of social support in that the source of support is a peer, a person who is similar in fundamental ways to the recipient of the support; their relationship is one of equality. A peer is in a position to offer support by virtue of relevant experience: he or she has "been there, done that" and can relate to others who are now in a similar situation. Trained peer support workers such as SCARS Volunteers receive special training and may be required to obtain Continuing Education Units, similar to clinical staff. Some other trained peer support workers may also be law-enforcement personnel and firefighters as well as emergency medical responders. groups allow victims to talk to other survivorsSurvivor A Scam Survivor is a victim who has been able to fully accept the reality of their situation. That they were the victim of a crime and are not to blame. They are working on their emotional recovery and reduction of any trauma either on their own, through a qualified support organization, or through counseling or therapy. And has done their duty and reported the crime to their local police, national police, and on Anyscam.com and recover in the most experienced environment possible, for as long as they need. Recovery takes as long as it takes – we put no limits on our support!
SCARS is the most trusted support & education provider in the world. Our team is certified in trauma-informedTrauma-Informed Trauma-informed care shifts the focus from “What’s wrong with you?” to “What happened to you?” A trauma-informed approach to care acknowledges that health care needs to have a complete picture of a patient’s life situation — past and present — in order to provide effective care services with a healing orientation. Adopting trauma-informed practices can potentially improve patient engagement, treatment adherence, and health outcomes. care, grief counselingCounseling Counseling is the professional guidance of the individual by utilizing psychological methods especially in collecting case history data, using various techniques of the personal interview, and testing interests and aptitudes. A mental health counselor (MHC), or counselor, is a person who works with individuals and groups to promote optimum mental and emotional health. Such persons may help individuals deal with issues associated with addiction and substance abuse; family, parenting, and marital problems; stress management; self-esteem; and aging. They may also work with "Social Workers", "Psychiatrists", and "Psychologists". SCARS does not provide mental health counseling., and so much more!
To apply to join our groups visit support.AgainstScams.org
We also offer separate support groupsSupport Groups In a support group, members provide each other with various types of help, usually nonprofessional and nonmaterial, for a particular shared, usually burdensome, characteristic, such as romance scams. Members with the same issues can come together for sharing coping strategies, to feel more empowered and for a sense of community. The help may take the form of providing and evaluating relevant information, relating personal experiences, listening to and accepting others' experiences, providing sympathetic understanding and establishing social networks. A support group may also work to inform the public or engage in advocacy. They can be supervised or not. SCARS support groups are moderated by the SCARS Team and or volunteers. for family & friends too.
SCARS STAR™ Member
SCARS offers memberships in our STAR program, which includes many benefits for a very low annual membership fee!
SCARS STAR Membership benefits include:
- FREE Counseling or Therapy Benefit from our partner BetterHelp.com
- Exclusive members-only content & publications
- Discounts on SCARS Self-Help Books Save
- And more!
To learn more about the SCARS STAR Membership visit membership.AgainstScams.org
To become a SCARS STAR Member right now visit join.AgainstScams.org
To Learn More Also Look At Our Article Catalogs
SCARS Printed Books For Every Scam SurvivorSurvivor A Scam Survivor is a victim who has been able to fully accept the reality of their situation. That they were the victim of a crime and are not to blame. They are working on their emotional recovery and reduction of any trauma either on their own, through a qualified support organization, or through counseling or therapy. And has done their duty and reported the crime to their local police, national police, and on Anyscam.com From SCARS Publishing
Each is based on our SCARS Team’s 32 plus years of experience.
SCARS Website Visitors get an Extra 10% Discount
Use Discount Code “romanacescamsnow” at Checkout
SCARS GREEN BOOK
Self-Help Self-Paced Recovery Program Guide
LEARN HOW TO RECOVER ON YOUR OWN
This program is designed to help scam victims struggling to recover on their own and for those who want to understand the overall process. You can be using other resources, such as traumaTrauma Emotional and psychological trauma is the result of extraordinarily stressful events that shatter your sense of security, making you feel helpless in a dangerous world. Psychological trauma can leave you struggling with upsetting emotions, memories, and anxiety that won’t go away. It can also leave you feeling numb, disconnected, and unable to trust other people. Traumatic experiences often involve a threat to life or safety or other emotional shocks, but any situation that leaves you feeling overwhelmed and isolated can result in trauma, even if it doesn’t involve physical harm. It’s not the objective circumstances that determine whether an event is traumatic, but your subjective emotional experience of the event. The more frightened and helpless you feel, the more likely you are to be traumatized. Trauma requires treatment, either through counseling or therapy or through trauma-oriented support programs, such as those offered by SCARS. counseling or therapy, qualified support groups, or completely independent – on your own!
The SCARS Steps program is a complete program and is provided for the purpose of helping scam victims to overcome this experience. Throughout this SCARS Steps Program, we speak about issues and challenges that a victim may have and help guide them through their recovery. But each person is different and it is important to understand your own reasons for being vulnerable to being scammed.
After the trauma of being scammed, you need to take steps to recover and move on. This may be an alternative to counseling in the short term, but we still encourage you to seek out professional help & support. Throughout this SCARS Steps Program, we speak about issues, challenges, defects, or problems that a victim may have in a generalized way.
The SCARS GREEN BOOK will help you recover from your scam offline and it will always be there when you need it!
SCARS SLATE BOOK – Let Us Explain What Happened!
A Guide For Families & Friends Of Scam Victims
HOW TO HELP ROMANCE SCAM VICTIMS FOR FAMILIES & FRIENDS OF SCAM VICTIMS
This SCARS Publishing book represents a complete guide to help the families and friends understand how these scams work and how to help the victim.
The SCARS Slate Book should be purchased by family and friends to better understand what happened to the victim and the traumatic impact on them. But it can also be shared by the victim so that they do not have to explain to family and friends about the scam. This publication is to help others to help Scam Victims to make it through this traumatic experience and recover.
Each person is different and it is important to understand how relationship scamsRelationship Scam A Relationship Scam is a one-to-one criminal act that involves a trust relationship and uses deception & manipulation to get a victim to give to the criminal something of value, such as money! Click here to learn more: What Is A Relationship Scam? work and why people are vulnerable; to being scammed, how they were lured in, then groomed and manipulated. This understanding is essential in helping them through the process of ending the scam and then on to recovery. The SCARS Slate Book will provide the information necessary to help support a victim through this process.
SCARS RED BOOK
Your Personal Scam Evidence & Crime Record Organizer
ORGANIZE YOUR INFORMATION TO MAKE THE REPORTING PROCESS SIMPLE!
Helps you get and stay organized. This publication is to help Scam Victims organize their crime information. Complete this information before reporting to the police then bring this book with you
Before or after reporting to the police the RED BOOK gives you a dedicated tool to record all the essential facts of this crime. The Victim, the Scammers, the Money, and your Police interactions. Everything that really matters can be easily recorded for your immediate use and for the future!
As we have seen, money recovery/repayment programs can become available years after the scam ends and you need to keep all the details of this crime in case it is needed. We have also seen scammers being extradited to the U.S. and other countries, this will help in the event you testify or give statements, Additionally, this helps you have your information ready to qualify for victims’ benefits, compensation, or aid.
The Official SCARS RED BOOK is your way of recording all the important facts of this crime so that you do not lose essential information, Complete the RED BOOK then put it away with the confidence that you will have it if or when it is needed.
100% of all profit goes to help SCARS help more scam victims worldwide.
Your generous purchase allows us to maintain our scam avoidance, support, and recovery services. Please help SCARS and stand proud.
PLEASE SHARE OUR ARTICLES WITH YOUR FRIENDS & FAMILY
HELP OTHERS STAY SAFE ONLINE – YOUR KNOWLEDGE CAN MAKE THE DIFFERENCE!
THE NEXT VICTIM MIGHT BE YOUR OWN FAMILY MEMBER OR BEST FRIEND!
Leave A Comment