Interpol Crackdown on Global Scam Networks Puts Focus on Online Payments Security

Interpol — short for the International Criminal Police Organization — may be familiar to readers as a staple of spy and action movies … where the police join forces around the globe to stop the bad guys in their tracks. And, as detailed in a recent announcement from the organization, those bad guys — the […]

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Interpol — short for the International Criminal Police Organization — may be familiar to readers as a staple of spy and action movies … where the police join forces around the globe to stop the bad guys in their tracks.

And, as detailed in a recent announcement from the organization, those bad guys — the scammers and impersonators, making off with hundreds of millions of dollars — are going digital. They’re impersonating people and enterprises, having formed international networks to create fake online shopping sites and to bilk unwitting victims out of data and of course raid their bank accounts.

PYMNTS Intelligence noted in joint research conducted with Hawk AI, “Leveraging AI and ML to Thwart Scammers,” 43% of all fraudulent transactions that financial institutions (FIs) process are, in fact, authorized fraud.

Authorized fraud pertains to schemes where account holders unwittingly initiate or approve payments to fraudsters, usually because they have been manipulated or deceived into believing the transactions are warranted. Authorized fraud, per the data, accounts for 37% of the total money FIs lose to fraudsters; however, the share of total dollars lost increases with FI size, accounting for 44% of fraud losses for FIs with more than $100 billion in assets under management.

Of the scams FIs report, 53% are product or services fraud, where users purchase goods and services that are never provided; the other 47%, meanwhile, are relationship or trust fraud, where customers are manipulated by a fraudster who eventually requests funds.

The International Reach of the Fraud Networks

To get a sense of just how global the scope has been, and the ways in which authorized fraud and even fake commerce sites have gained ground, Interpol said it has come full force into 61 countries to freeze 6,745 bank accounts, seize assets totaling USD $257 million and arrested 3,950 suspects, having “identified 14,643 other possible suspects in all continents.”

In Operation First Light 2024, “Police collectively intercepted some USD $135 million in fiat currency and USD $2 million in cryptocurrency … Other assets worth over USD $120 million were seized, including real estate, high-end vehicles, expensive jewelry, and many other high-value items and collection,” Interpol said. In just two far-reaching geographic examples offered up by Interpol, police intercepted USD $331,000 in a business email compromise fraud involving a Spanish victim who transferred money to Hong Kong, China. Elsewhere, authorities in Australia successfully recovered AUD 5.5 million (USD 3.7 million) on behalf of an impersonation scam victim, after the funds were fraudulently transferred to bank accounts in Malaysia and Hong Kong, China.

ScamClassifier Debuts

Last month, the Federal Reserve and a working group of payments and fraud experts debuted the ScamClassifier model, billed as a “voluntary classification structure that supports consistent and detailed classification, reporting, analysis and identification of scams, attempted scams, and related trends.” The newest model takes its cue from the FraudClassifier model that launched in 2020. The scams are growing in both “prevalence and severity,” said the Fed, with more than $10 billion in off-site consumer fraud losses reported to the Federal Trade Commission in 2023, up 14% from 2022.

In terms of the mechanics, the ScamClassifier model uses a series of questions to differentiate and classify scams and attempted scams by category and type. Among the actions tied to or resulting from those scams, per the Fed: “Either an authorized party was tricked into making the payment, OR the authorized party was tricked into enabling the fraudster to access the account.”

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