Banks combat identity thieves by segmenting customer warnings

Crooks are getting craftier about how they steal from consumers, and in response banks are developing more creative ways to warn their customers.

ID theft originating from scams — where criminals trick the victim into giving up personal information, such as by text or email — produced $43 billion in consumer losses in 2020, according to a study released this year by Javelin Strategy & Research. It was the first year the company sought to measure this more sophisticated spin on old-fashioned identity crime.

Financial services providers sustained an average loss of $1,100 in such incidents, the study found.

Banks risk losing customers who fall prey to scams and are dissatisfied with their bank’s response, even when the customers themselves provided sensitive information in the first place. Thirty-eight percent of identity fraud victims closed the bank accounts where the fraud took place because they were unhappy with the bank’s resolution, according to the study.

Republic Bancorp in Louisville, Kentucky, and Wells Fargo are among the banks working to lessen the blow of traditional identity theft and scams to customers and to themselves through consumer education campaigns. The best efforts use all kinds of digital media, including online pop-up messages, social media posts and videos.

“For some institutions it’s been a focal point for a long time,” said Tracy Kitten, director of fraud and security at Javelin Strategy & Research and a co-author of the study. “Others have taken it upon themselves to be proactive because they’ve seen an uptick in scams and fraud.”

She notes there is an appetite for education among younger customers in particular, “because they know they have riskier behaviors,” Kitten said. “They want to know more about how they can and should protect themselves. When older consumers fall victim, they expect the financial institution to make them whole.”

One key to a good educational campaign is to recognize that not everyone absorbs knowledge the same way or spends time in the same channels, from younger customers who are glued to their phones to older customers who have not given up paper statements. It’s also important to target messages to particular groups, such as sending retirees warnings about Social Security-related scams.

“You can’t throw a bunch of videos on a website and expect that to be enough,” said Kitten.

The $6.5 billion-asset Republic, parent company of Republic Bank & Trust, uses different means to reach customers with warnings and advice, depending on their age or reason for banking with Republic. Multiple teams, including digital experience, digital marketing, business banking and customer experience, work in concert to deliver these messages on social media, via email, in the company’s mobile app and more.

Jim Ensign, chief brand officer for Republic, says more than two-thirds actively use digital banking. But for those who continue to visit branches, typically baby boomers and older customers, Republic will publish messages across in-branch digital screens and include tips on avoiding fraud in monthly paper statements. Tips and warnings are printed on homepage banners and pop-up messages upon login to reach baby boomers and Generation X; for those groups, Republic leans on Facebook (especially videos) and email as well. The community bank hopes to reach its millennial and Generation Z customers with in-app banners and Instagram posts.

Business customers, who could be any age, are targeted by LinkedIn posts and webinars.

The messaging can range from warning customers about questions a bank will never initiate over the phone, as part of the American Bankers Association’s #BanksNeverAskThat educational effort last October, to reminders about how to electronically turn off a debit or credit card if it is lost or stolen.

Republic’s #RBEasyTips campaign, which exists on social media, is especially prominent on LinkedIn. Real employees from the bank will post nuggets of advice with the hashtag #RBEasyTips (a nod to Republic’s tagline, “It’s just easier here”) on topics including fraud. For example, one digital experience specialist advised her followers to choose complicated usernames and passwords for their online bank accounts and to contact their financial institutions if an offer over email, phone or text sounds too good to be true.

“It helps because you’re getting it from a trusted person, not an institution,” said Ensign.

Design matters depending on the channel. Instagram messages will favor graphics over copy. For example, a post back in December used animations to point out a scam text alert that is sent from a standard number, compared with “short codes” that are behind authentic text messages from the bank. Republic has also found that videos tend to garner more traction on Facebook than static content.

The variety of channels and mediums is also important, because it reinforces Republic’s points no matter where customers spend their time online.

“We know more often than not you need to see a message two to three times before you pay attention,” said Ensign. “We never count on one channel.”

He reports that he has seen fewer incidents of individuals falling victim to scams, and cites anecdotal stories that suggest the efforts are working. For example, customers will sometimes proactively call the contact center to report a suspicious call and check whether it really came from the bank.

“It creates a more satisfied client when they know we’re not just there for transactions, but as a partner to help them with their financial lives,” said Ensign.

Wells Fargo is another institution that emphasizes customer education.

The bank has a customer fraud education team that highlights “trending” scams and teaches customers how to protect themselves; for example, one article under the financial education section of its website details three IRS impostor scams. A recent area of focus is online shopping scams.

“During the pandemic, we shifted our education strategy to focus on promoting awareness of emerging scams,” said a spokesperson via email. “As stimulus payment scams became more prevalent in 2020, we moved quickly to update our communications and provide guidance on how to spot and avoid these scams.”

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