Welcome to the first installment of our “Scam Likely” series where we blow the lid off recent scams, frauds, and other financial crimes. People in the U.S. are losing an estimated $119 billion to scams every year. On top of that, for many banks, their annual fraud losses far exceed their loan losses — a recent report suggests nearly 1/3 of banks lost more than $1 million due to fraud in 2025. If our new series helps prevent even one person or bank from losing $1 to a scam, then it was well worth it!
The Set Up
A customer calls your bank, very frustrated and panicked that no one can find their new account. Your highly trained customer service team de-escalates the situation and deciphers what happened. The customer received a call that appeared to come directly from your bank — “ABC Bank” even popped up on their caller ID! Their “banker” informed them that there was suspicious activity on their account and that the bank needed to close it and open a new, secure account for them. This was VERY urgent — act now or risk losing your money. The phone number, caller ID, and confident delivery convinced the customer this was the real deal. They remember feeling relieved and telling the faux banker: “Phew, thank goodness my bank has my back.”
The Actors
As you probably guessed, the caller was not their banker. Rather, the caller was a sophisticated fraudster using caller ID spoofing and basic customer information to build credibility. Millions of individuals receive these dangerous calls every day. From the bank’s perspective, its identity is being fraudulently used to steal from its customer, despite the fact the bank has no knowledge (or involvement in) the scam.
The Grift
On the customer’s call with their “banker,” the scammer directs the customer to transfer their funds to a new, secure account (often via wire, peer-to-peer payment, or cash deposit at a Bitcoin ATM). The customer is promised they will receive a new debit card via overnight delivery. Of course, the “new” account is actually controlled by the scammer and has no connection to the bank. The bank only learns of the scam after the customer calls the bank and realizes they have been duped.
The Pain
Losses can be immediate and difficult to recover. Because the customer initiated the transfer, the bank’s traditional fraud controls designed to identify unauthorized transactions are not likely to be triggered. Further, many consumer protection laws will not apply because the customer authorized and initiated the transaction (even if they did so under false pretenses). The bank is then in the uncomfortable position of delivering the bad news to the customer. Understandably upset, the customer may then turn to social media to vent and, in some cases, may file a formal consumer complaint with the banking regulators. Banks must then do damage control to address reputational risks for losses that they did not cause.
The Reality: Why These Scams Keep Working
Most individuals feel too embarrassed or humiliated to report this type of crime to law enforcement — in fact, a recent study found that 74% of people in the U.S. who lost money to an online scam never contact law enforcement. Further, banks are experiencing increased pressure from consumer trade groups to detect and interrupt scams that customers themselves authorize — in response, many believe banks have no duty to babysit or keep a watchful eye over every transaction a customer makes. The reality is that fraudsters are focusing on, and getting better at, impersonation, not infiltration, which shifts the battleground from the server room to the customer relationship. New fraud detection technology, raising awareness, and customer education are the best tools available as we navigate this new scam era.
If you have questions about scam prevention, fraud risk, or related regulatory issues, our Financial Services attorneys are available to help.
This article is provided for informational purposes only—it does not constitute legal advice and does not create an attorney-client relationship between the firm and the reader. Readers should consult legal counsel before taking action relating to the subject matter of this article.
