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Financial Phone Fraud Attempts Double in 1H 2013: Report

Pindrop Security, a startup focused on combating phone-based fraud for banks and enterprise call centers, has released a new report outlining some of the risks phone fraud poses to financial institution call centers.

Pindrop Security, a startup focused on combating phone-based fraud for banks and enterprise call centers, has released a new report outlining some of the risks phone fraud poses to financial institution call centers.

The report, “KYF: Know Your Fraudster – Phone Fraud in Financial Institution Call Centers 1H 2013“, was compiled based on the analysis of phone fraud activity during the first six months of 2013 using the company’s Phoneprinting technology, which analyzes the audio content of a phone call.

Pindrop Security LogoPhone fraud is a multimillion-dollar industry led by professional, organized attackers, the company explained.

“Financial institution call centers are a leading target for phone fraudsters, and attackers use a variety of social engineering and account manipulation techniques to steal via wire transfers, Account Clearing House (ACH), and cards. Financial services companies lose millions of dollars each year due to phone fraud,” Pindrop said.

Key findings from the report include:

• Phone fraud has a significant financial impact: Pindrop analysis revealed that 1 in every 2,500 calls into a financial institution’s call center is fraudulent, and for every phone call into a financial institution call center there is a $0.57 loss. The average loss per financial account was $42,546.

• Phone fraud is organized and scaling: Individual phone fraudsters targeted anywhere from 5-10 accounts to as many as 200-300 accounts, often working in groups ranging from 2 to 12 members.

• Fraudsters are increasingly targeting consumers directly: During 2012, Pindrop counted over 2.4 million consumer complaints of phone fraud attempts. By comparison, during the first six months of 2013 Pindrop detected 2.3 million complaints.

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The Atlanta, Georgia-based company provides solutions that help detect and block this type of phone-based fraud.

Based on audio analysis using 147 unique characteristics, Pindrop’s technology can verify the geographic origin of a call and whether the call was made from a landline, mobile phone, or specific Voice over Internet Protocol (VoIP) provider.

The company claims that its technology identifies over 80% of inbound fraud calls to enterprise contact centers.

“Phone fraud is a significant vector for organized cybercrime, and the impact that it has on financial institutions and other enterprises will only continue to grow as phone fraudsters scale their efforts,” said Vijay Balasubramaniyan, co-founder and CEO of Pindrop Security. “Financial institutions need to familiarize themselves with best practices to mitigate phone fraud in order to prevent their customers’ accounts from a future breach.”

After raising a $1 million seed round of funding in May 2012, the company closed an $11 Million Series A investment round in June 2013 led by Andreessen Horowitz and Citi Ventures. 

Written By

For more than 10 years, Mike Lennon has been closely monitoring the threat landscape and analyzing trends in the National Security and enterprise cybersecurity space. In his role at SecurityWeek, he oversees the editorial direction of the publication and is the Director of several leading security industry conferences around the world.

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