The topic of scams and fraud has been a recurrent theme in the news over the past years. Recently, the alarming increase in cases, especially the fake contact center scam, has drawn the attention of industry and law enforcement, primarily due to the high amount of money involved in these crimes.
The problem is not limited to any country or region; it is a problem on a global scale. However, Brazil and other parts of Latin America have been particularly hard hit. So, what is the impact and what is contributing to the problem?
A survey by the Brazilian Federation of Banks (FEBRABAN) suggests that 38% of Brazilians have already fallen victim to some form of financial fraud, with most involving social engineering. The concentration of victims was those with higher levels of education and income. This is supported by a recent BioCatch study which revealed that across Latin America, one in three fraud cases in 2023 were attributed to social engineering attacks with the largest increases witnessed in Brazil, Mexico, Chile, and Argentina.
And what are the contributing factors? According to the 2023 ICT Household Survey, 90% of digital scams in Brazil last year resulted from social engineering, weak passwords, and a lack of multifactor authentication.
There are other factors that are also causing the scam epidemic. Criminals have specialized in using increasingly sophisticated methods, mimicking financial institutions to deceive victims. They take advantage of easy access through social networks and communication apps (WhatsApp and Telegram) to expand their network of opportunities, exploiting people's goodwill and ignorance. Currently, the use of artificial intelligence ('deepfake') to bypass bank security measures or execute fraud by deceiving victims is also becoming more prevalent.
Scams Leave Psychological Scars
However, there is a little-observed aspect in this context by companies: the emotional aspect of scams. The experience of being deceived in a financial fraud involves more than just material losses; it impacts the victims emotionally and psychologically, leaving lasting scars. It is believed by many that most scams go unreported by victims due to the shame, embarrassment, or guilt they experience from being defrauded.
Psychologists and psychiatrists highlight some emotional aspects of this experience:
• Feelings of betrayal and distrust. Besides feelings towards the criminal, victims extend this context to financial institutions, alleging that they "failed to protect them." Many victims give up using products or services after such events. FICO, a leading credit analysis company, reveals the devastating effects of financial fraud on consumer behavior:
• 45% of fraud victims stopped using the bank or financial institution where the crime occurred.
• 23% of consumers who suffered fraud canceled their credit cards.
• 17% closed their bank accounts.
• Guilt for not being attentive and vigilant, coupled with shame for their naivety. These feelings can negatively affect self-esteem and emotional well-being.
• Anxiety and stress stemming from concerns about their security and the fear of being attacked again. Anxiety interferes with daily life and affects the victims' quality of life, such as sleep and concentration. These feelings are heightened when the financial loss is significant and affects the ability to pay. A study by the University of Cambridge reveals that fraud victims experience high levels of stress, anxiety, and depression due to the sense of violation and betrayal associated with the fear of new fraud.
• Distrust leads to social isolation. Victims withdraw, feeling lonely and helpless, avoiding sharing their experiences with others for fear of judgment or stigma.
• When the victim is elderly, these symptoms worsen as they are more vulnerable and often the preference of criminals. An article published in Psychology Today details the consequences in this type of victim (depression, anxiety, nightmares, increased risk of suicide, and disrupted sleep). Another study published in the National Library Of Medicine reports an increased risk of deception due to declining functional connectivity in aging, such as declines in processing speed and memory, socioemotional factors including positive affect, and social isolation.
What Financial Institutions Can Do on the Front Lines
What role do financial institutions play on the front lines? After all, they usually receive the first contact from victims in a moment of vulnerability. When victims realize they have been deceived, they turn to the financial institution's customer service, and this moment becomes crucial in the relationship between both. Inevitable questions arise about the institution's failure to protect, and it is very common to find professionals who are unprepared to handle these delicate situations.
The first action financial institutions should take to assist scam victims is to provide specialized support. At this moment, chatbots and lengthy options in the IVR exacerbate the client's emotional state. By providing direct human assistance, there is a clear demonstration of the institution's commitment to their customer’s well-being that go beyond commercial relationships. This attitude emotionally connects the company to the client and serves as the foundation for building stronger and more lasting relationships. Treatment with specific guidance, empathy, and support in recovering losses can make a difference in the client's life.
Here are some practical recommendations for implementing this process:
• Create a specialized customer service team with people chosen for their emotional skills in conflict situations.
• Provide specific training to recognize signs of emotional distress, using non-violent communication (NVC) techniques and basic psychological support. Demonstrate empathy, acknowledging the victim's feelings such as anger, fear, and sadness.
• Welcome the victim with active listening and without judgment; at this moment, they need support and understanding. Before discussing processes and rituals regarding financial matters, listen attentively and without judgment. These are fundamental attitudes to build trust.
• After welcoming, clearly present the necessary procedures, validate the client's understanding, and provide written instructions, as misunderstandings may occur due to stress.
• Allow access to hierarchy when requested by the client questioning the process.
• Communicate about the complaint process. Adopt simple language adapted to the client and avoid technical terms. Have clear policies and procedures, keeping the client informed throughout the process, from registration to case resolution.
• Update teams on scams and new modus operandi through detailed and ongoing training. It is essential for the customer service team to be able to identify the modality to properly support and direct the client, avoiding new conflicts due to communication failures.
• Implement financial education programs for all clients and society to guide them on how to identify and prevent scams. Communications should contain personalized approaches by age, language, social class, and culture. Clients are key allies in fraud prevention and detection; the more informed and updated they are, the lower the chance of success for fraudsters.
• Use data and Voice of the Customer (VoC) programs for continuous improvement through feedback from strategy and operations areas.
Conclusion
Financial institutions that want to stand out can offer resources and channels for emotional support, education, and counseling to help scam victims overcome the incident and learn how to better protect themselves to avoid becoming a victim again in the future. Security and trust are essential values in the financial system. By adopting a specialized and careful process, financial institutions can stand out in the market, being seen as a reference in assistance, care, and support for victims, and bringing positive returns to the business.
