11 Questions You Should Be Asking Customers Who Are Victims of Fraud

If you attended the Money 2020 conference in Las Vegas this past October, you couldn’t take 10 steps in any direction without running into a vendor pushing their fraud solution…and for good reason: The numbers are staggering:

  • Balances from synthetic fraud – where fraudsters create fictitious identities with the intent to open fraudulent accounts — rose 5.2% to $290.4 million from the fourth quarter of 2016 to 2017. The incidence of such fraud on credit applications stood at 0.60% in 2017.
  • Losses due to fraud in the banking industry rose to $2.2 billion in 2016, up 16 percent from 2014, according to American Bankers Association’s 2017 Deposit Account Fraud Survey Report. And that’s despite the nation’s banks stopping nearly $17 billion in fraudulent transactions in 2016.
  • The 2018 Identity Fraud Study from Javelin Strategy & Research, revealed that the number of identity fraud victims increased by 8 percent (rising to 16.7 million U.S. consumers) in 2017. The study found that despite industry efforts to prevent identity fraud, fraudsters successfully adapted to net 1.3 million more victims in 2017, with the amount stolen rising to $16.8 billion.

Fintechs Have a Role in Reducing Fraud

The good news is that fintechs – which represent a growing portion of Katabat’s client base – are helping to fight the growth in fraud as they enter into an increasing number of partnerships with banks and other financial institutions. Fintechs can offer greater levels of agility and scalability to adapt and respond to challenges such as this and help drive a more innovative and secure environment.

As Zia Hayat, CEO of Callsign, put it in a November 2018 Payment Week article, “when banks partner with fintechs, they are often able to benefit from the seamless UI and UX, useful APIs with other trendy and innovative services, and sometimes new methods for authenticating their customers.”

In many cases, non-traditional lenders have focused so much of their time on acquiring new customers and developing great acquisition models, they haven’t focused as much on some of their need to deal with fraud and collections of delinquent accounts.

What’s Your Process for Opening a Fraud Case?

Do you have a process for consistently collecting the information you need to efficiently process a fraud case?  If you don’t have enough volume to have a dedicated fraud unit, here are the questions to ask to start a fraud case:

  1. What type of product is the customer calling about?
  2. What portion of the balance are you claiming as fraud?
  3. Was the customer present in the location where the transaction(s) occurred on the date they occurred?
  4. What type of fraud (Familiar (family/friend), No Idea (identity theft, skimming, counterfeit), or Lost/Stolen)?
  5. What specific transactions (or what specific portion of the balance) are you claiming as fraud?
  6. Was someone else using your account with your permission?
  7. Do you recognize the amount, the merchant, or both?
  8. If applicable (i.e., not an auto/mortgage loan), have you disputed the transactions claimed as fraud directly with the merchant?
  9. If applicable (i.e., not an auto/mortgage loan), do you still possess the checks and/or credit cards associated with the account.
  10. Are you aware of who committed the fraud? If yes, tell us about the alleged perpetrator.
  11. Have you filed a police report with local law enforcement authorities? (Note: Some banks waive this for small amounts).

 Don’t Forget the Disclosures

You can provide your disclosures either verbally or in written form, and receive acknowledgment the same way:

  • Let them know they’ll need to sign a fraud affidavit listing the transactions/balance being claimed as fraud and stating that they are not responsible for the transactions.
  • Let them know how long the investigation process typically takes (normally 30-90 days).
  • Let them know they won’t be held responsible for paying the fraudulent transactions during the investigation.
  • Let them know they’ll be expected to be reasonably responsive to requests for additional information.
  • Inform them that if they’re found to be responsible for or authorized the transaction(s), they will be liable for repayment of the full balance owed, including fees and finance charges that accumulated during the investigation.

How We Can Help

Katabat’s enterprise workflow solution can help you with workflow solutions for managing fraud cases – and many other processes.  Liberate offers audit capability, business process automation, role-based task management, the ability to send customer communications at different steps within a workflow, case creation, and account-status assignment.


Katabat is the leading provider of debt collections software to banks, agencies, and alternative lenders. Founded in 2006 and led by a diverse team of lending executives and leading software engineers, Katabat pioneered digital collections and has led the industry ever since. It is our mission to provide the best credit collections software in the market and solve debt resolution from the perspectives of both lenders and borrowers.

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