[00:00:03] Frank McKenna: I got caught up in the moment.
So yeah, anyone can and probably will be a victim of scam at some point.
[00:00:21] Bob: Welcome back to The Perfect Scam.
I’m your host, Bob Sullivan.
And here to help us do both those things are Frank McKenna and Ayelet Biger-Levin.
But first, let’s meet Ayelet.
You’ll hear about that soon too.
But we begin our conversation with a simple question: Where do things stand in the fight against fraud?
And then we see them eventually ending up here as well.
I think here it’s just the beginning.
It’s a beginning for financial institutions, it’s the beginning of the scams in general.
[00:01:57] Bob: Why are scams growing so fast?
What is not well regulated yet is scams.
[00:03:07] Bob: Financial institutions do use sophisticated software to stop fraud.
That’s almost impossible to detect.
[00:03:41] Bob: We’re asking technology to detect intent.
Wow, that’s a mouthful.
[00:03:46] Ayelet Biger-Levin: Exactly.
They’re both new payees; one of them is legitimate, the other one is not.
Um, it’s really hard.
[00:04:01] Bob: Cybercrime that involves victims is becoming faster and easier to commit, she says.
Especially with the rise of cryptocurrency scams.
[00:04:33] Bob: That’s really interesting.
So you know, someone can write you, you know, “Janet, how are you?
Um, I just wanted to say that…” something or whatever.
And then it’s like, “Oh, you’re not Janet.
Sorry, it’s a wrong number.
Oh, you’re so kind.
Where are you from?”
“I’m from LA.”
And all these great things.
And then they, they say, “You know how I got all this money?
I used; I invested in crypto.
I have a friend and he told me this and like that.”
Victims can see their whole life savings stolen.
And there’s a bigger picture problem that’s often missed, Ayelet says.
[00:05:38] Ayelet Biger-Levin: This is a phenomena that goes beyond the banks.
It will impact government and taxpayers as well.
And we need to consider the wholistic aspect.
It, it’s kind of an attack on our economy and the global economy.
And trillions of dollars.
[00:05:54] Bob: Trillions of dollars.
Scams are an attack on the global economy.
We’ll hear more from Ayelet in a moment.
But our next guest has been working on the front lines of fraud fighting for many years.
And he has a lot to say about what crimes are coming down the pike.
[00:06:20] Frank McKenna: Yeah, my name is Frank McKenna.
We’re a AI company that focuses on fraud, particularly for auto and mortgage lenders.
[00:06:35] Bob: For Frank, fraud is personal.
And about half the time it wasn’t.
And so we were notifying the customer that of something they didn’t even know about.
[00:06:50] Bob: What an amazing experience to actually be talking to human beings experiencing fraud.
[00:06:54] Frank McKenna: Yeah, most people are kind of shocked.
So walking them through that process of understanding who might have taken it was really interesting as well.
[00:07:28] Bob: Oh my God.
I can’t even imagine.
And, and then they have to suddenly realize this person I trusted I can’t trust anymore.
[00:07:34] Frank McKenna: Yeah, exactly.
[00:07:53] Bob: And the vast majority of them are getting away with it?
[00:07:57] Frank McKenna: The vast majority are getting away with it.
I would probably guess about 99.9% of people that commit fraud get away with it.
[00:08:05] Bob: Oh my God, that’s crazy to think about.
This is that process of getting consequences, is very hard to get a prosecution.
It was a police officer.
And I was getting kind of caught up, I was really afraid.
But then when they told me to send an Apple card, I knew it was a fraud.
So that was the first time I, I kinda realized.
I was pretty late into the call before I realized that.
And that was several years ago when those types of scams were not unusual.
The other scam was during COVID.
You know you couldn’t find it anywhere.
And sure enough, within a minute I found a site that was selling Lysol for like $3.
It wasn’t Lysol at all.
And to me my big learning was if it’s too good to be true, it probably is.
And I lost, you know, money out of that so.
[00:10:26] Bob: You know, I think that’s a great example though.
Like there’s a scam for everyone.
[00:10:52] Frank McKenna: Yeah, exactly.
And you think, how could I be a victim, like this is what I do all day.
I would say I’m like pretty savvy about scams, but I got caught up in the moment.
So yeah, anyone can and probably will be a victim of scam at some point.
[00:11:14] Bob: I really appreciate you sharing that.
That’s going to make a, I think a lot of our listeners feel better.
So thanks, Frank.
The other observation he has to offer about today’s criminals is that they change their tactics constantly.
In fact, so often that Frank has a name for that now.
He calls them shape shifters.
[00:11:41] Frank McKenna: Yeah, shape shifter is a new throw in of fraudster.
These shape shifters are working in coordination with each other.
And these people are all communicating back and forth about how to defraud people.
They’re using really sophisticated tools, like you think about ChatGPT that just launched.
These are scientists that know how to build models that can penetrate lenders and consumers' defenses.
[00:12:57] Bob: How does shape shifting work in practice?
There were a global group of fraud attackers who were attacking merchants here in the United States.
They were pushing through transactions all over the world to these merchants.
And they would do it again.
[00:14:09] Bob: Some of these teams have names.
[00:14:12] Frank McKenna: Yeah, the Master Manipulators are shape shifters.
According to Frank, the groups behind that scam are even more sinister than you might probably imagine.
But those are committed by slaves, essentially, that are forced into it.
[00:16:19] Frank McKenna: And a workforce that will do anything because they will punish these people.
[00:17:03] Frank McKenna: They probably, yeah.
[00:17:29] Frank McKenna: Yeah.
The problem of check fraud is doubled in the last year.
Now it’s dominating.
You just see so many stories.
So what are they doing?
They’re doing a few things.
They’re stealing checks out of the mail.
That’s, that’s shocking to me that this is the problem still.
It, it is amazing.
[00:19:06] Bob: Wow.
They say they’re calling from the bank, that there’s been an attempt on your account.
To prove your identity they’re going to send you a one-time passcode.
you better read it back to them so that they can help you.
It’s one-time passcode bots.
They just go to the next one.
They can do thousands of these applications in an hour.
So it’s all been automated.
And that just means that no one’s behind that.
It’s just like a robot.
[00:21:17] Bob: Wow.
But where, where does the robot get the data from to attempt the applications?
[00:21:22] Frank McKenna: The robot gets the data from two places.
The first place is the Dark Web.
And you might buy these lists.
And this is all in this spreadsheet that they basically use that spreadsheet.
And then you just push it into the robot and the robot will roll out and apply.
It will go out to hundreds of different websites and apply for accounts.
Um, yeah, there are billions.
Most people don’t realize that their data is probably for sale somewhere on the Dark Web.
There are literally billions and billions of records for sale right now.
My data’s probably in there.
Your data’s probably in there.
You know, I’ve been a victim four times of identity theft in the last 18 months.
I’m sure my data’s out there.
[00:22:26] Bob: And I’m sure my data is out there too.
And for her, the fight is personal too.
[00:22:52] Ayelet Biger-Levin: I cry in movies.
I cry when I watch movies that, that are emotional.
She did believe the bank.
She didn’t continue.
And then after that, she hung up.
But we really need to understand and consider the human side.
And that hit me and that from that point on, I just had to do something about it.
The emotional impact and what can we do to spare victims from being victims in the first place.
[00:24:52] Bob: There’s an emotional side to this quest.
So understanding the human side of crime will help everyone.
[00:25:09] Ayelet Biger-Levin: It’s really hard to stop the scam at the transaction point too.
So it’s called the bank impersonation scam, or authorized push payment fraud.
So they’re convincing them, they’re giving them more details.
They don’t know who to believe.
They don’t know who’s a scammer and who’s not.
And it’s very scary.
People don’t believe.
They’re too invested in the scam.
They’re too emotionally into it to stop.
So what I think we need to do is look across the scam life cycle.
And at some point they will transfer money.
After they transfer the money, at some point they will realize it is a scam.
And then they’ll do one of two.
One is they’ll just feel ashamed, and two, is they will report it.
They direct them to the FBI; they report to the FBI.
The FBI will take that, learn from it, and maybe take the case or maybe not.
And if, if they’re lucky enough, there will be an attempt to recover their money.
What I think we need to do is start from the very beginning, start with education.
Someone needs to take responsibility to drive awareness.
And I think you guys at AARP are doing a great job with driving awareness and education.
It really needs to be done by everyone who is a touchpoint in this life cycle.
So that’s step number one.
Now education is not enough.
The stories are so easy to come up with.
Once it’s out of context, I don’t remember what I learned.
It’s important to have education and awareness, but it has to be a habit of consumers.
So that’s kind of the part of education.
The next step is to do better in the data that comes.
So that’s really an opportunity to stop it before their emotional manipulation starts.
It’s just the beginning, but it helps a little bit.
There are tools like behavioral biometrics that help with identifying intent a little bit.
So it’s a collection, a layered approach.
And how can we help them, even if we don’t have the resources to take the case.
The digital crime is a crime too, and we need to address it appropriately.
AARP’s very own Kathy Stokes was the first guest.
So you know it’s, it’s horrible.
It’s a horrible story, but we need to know what’s going on.
And every episode I’m kind of looking for, okay, how are banks going to protect us?
How are telcos going to protect us?
Because it often starts with a phone call or a text message, or something on social media.
What are big tech companies doing to protect us.
[00:31:02] Bob: So many very large companies, how would you coordinate such an effort?
[00:31:05] Ayelet Biger-Levin: That’s my quest.
That’s a really good question.
And at the end of the day I think it’s governments.
There are a lot of nonprofit organizations against scams, fighting scams, but they’re small.
It’s not just the US.
It’s really a global problem.
So that’s in my, on my list, number one, to educate people for these scams.
Phishing scams are just all these scams with a link.
They’re going to continue.
They’re very successful.
Billions of dollars are lost to identity theft scams.
They’re used later for account takeover.
The impersonation scams, the bank impersonation scams that I talked about earlier are also a huge problem.
So this is an open tool that allows people to submit a query and then get a response.
What’s going to happen is now fraudsters are going to use that tool in their conversations.
So I’m absolutely not talking to an American right, right now.
So they’re already using this tool to write text and impersonate people and that’s pretty scary.
How are you?"
So now they can do that with this technology.
[00:34:39] Bob: Deep fakes.
That’s a technology all of us need to keep an eye on.
And both Frank and Ayelet think so, too.
I think organizations across the board are worried about this.
Now that’s first off.
That’s the first bit of good news is that it’s going to get better.
The second piece of good news is that banks are really stepping up to protect consumers from fraud.
Thanks for listening this season.
Call the AARP Fraud Watch online grid Helpline at 877-908-3360.
Their trained fraud specialists can provide you with free support and guidance on what to do next.
Be sure to find us on Apple Podcasts, Spotify, or wherever you listen to podcasts.
For AARP’s The Perfect Scam, I’m Bob Sullivan.
But the other begins to have doubts.
