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Fraudsters change tactics as a crackdown cuts some losses due to online scams

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This post authored by Dr Cassandra Cross from QUT originally appeared on The Conversation on Tuesday March 1, 2016.  

The amount of financial loss from online fraud suffered by people in Western Australia has almost halved, dropping from A$16.8 million in 2014 to A$9.8 million for 2015, according to a statement this January from the state’s Attorney General and Minister for Commerce, Michael Mischin.

In addition, the minister noted that losses from relationship and dating fraud have fallen by 55%, to A$4.9 million lost last year.

These are both impressive claims, and at face value, there is truth to the statistics. Both assertions are based on data received by WA’s Scamnet, which is the public interface between consumer protection and citizens.

While it is good to see a reduction in the number of losses overall, particularly to relationship and dating fraud, it is highly unlikely that the statistics tell the full story.

An under-reported crime

It is well known that fraud has one of the lowest reporting rates of crime types. Reasons include uncertainly in whether a crime has been committed, not knowing who to report to and the shame and embarrassment of being deceived. Generally speaking, reported fraud losses are understood as the tip of the iceberg of actual money lost and harm experienced by victims.

The minister’s statement also covered Project Sunbird, a joint initiative between West Australian Police and the West Australian Department of Commerce. Project Sunbird uses financial intelligence to identify and contact people who are sending money to West African countries and notifies them of any suspicions.

The statistics for Project Sunbird show more modest reductions, with the minister reporting that the overall amount of money sent for romance and investment fraud decreased by 26% in 2015. About 72% of people who received a first letter warning of any suspicions stopped sending money immediately, and half of those who received a second letter also stopped sending money.

Again, the statistics are exciting and point to some positive results from Project Sunbird. But there are also caveats to these statistics.

I am a strong supporter of the Project Sunbird approach and have written before on its benefits. But I also believe there are factors that need to be considered in conjunction with these latest reported statistics.

Scammers on the move

Project Sunbird only looks at transactions to a small cluster of five West African countries – Nigeria, Ghana, Benin, Sierra Leonne and Togo. Historically, these have been hot spots for offenders.

Offenders are now asking victims to send money to other countries, including some in Asia, which are not targeted under Project Sunbird, and other similar projects.

The evaluation period for Project Sunbird is three months and only covers the five West African countries. While people may cease sending within these limits, there is currently no ability to expand the project to other countries for a longer period of time.

There has also been a shift in the ways that victims transfer money overseas. Offenders are increasingly using (often unsuspecting) money mules in Australia to move money.

In my latest research interviewing online fraud victims, a large number of victims were asked to send money via a bank transfer to an Australian account. This has changed from earlier work I did where the main focus was on remittance agencies, such as Western Union and Moneygram.

This new approach appealed to victims who were aware of the risks in sending money overseas. There was an increased sense of legitimacy in transferring the money to an Australian bank account.

But once transferred to the Australian account, the money is quickly shifted offshore to offenders. None of this is captured in the Project Sunbird figures.

Changed tactics

Offenders are also changing the methods they use to ask for money. Rather than sending cash through a remittance agency or bank transfer, there is anecdotal evidence from police that some victims have been asked to buy prepaid debit cards and forward these on.

Offenders still receive something of monetary value. However, the use of prepaid currencies avoids current forms of detection.

There are many other factors that could also be considered. For example, the existence of a few high-loss victims can increase or decrease overall dollar values figures significantly.

It is encouraging to see the current downward trend in statistics of the money lost to fraud. Project Sunbird has done a lot in terms of awareness raising and education for the community. It is also an important tool for law enforcement and consumer protection agencies in their bid to reduce victimisation.

Why do people still fall for scams?

There is a great opportunity to further evaluate the impact of Project Sunbird and its influence/crossover with Scamnet results. But I know that whatever the statistics say, there is still the question of “why do so many people fall for it?”

My response is simple. It’s important to remember the highly skilled nature of offenders. It’s critical not to underestimate their skills of persuasion and the many social engineering techniques they use to manipulate and exploit individual vulnerabilities.

Everyone has a weakness which, if targeted in the right way at the right time, may make them susceptible. We need to acknowledge that.

The current figures paint a hopeful picture that sees a decrease in the number of victims and the associated amount of losses, though I would argue it is not cause for celebration yet.

Online fraud still poses a significant problem to Australians. It would be a mistake to think that Project Sunbird has solved the issue based on the combination of these statistics.

Rather we must turn our attention to the evolution of these offences and the new ways offenders are targeting potential victims. We must look for new opportunities to ensure that Project Sunbird and other future approaches to combating online fraud are as fluid and flexible as the offenders they seek to target.

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