Crypto “pig butcher” scams highlight the need for an evolution in fraud prevention for finance
A warning from the FBI Monday, about the rise of a crypto system called pig butcher, highlights the need for financial institutions to implement more sophisticated fraud detection programs as part of their own transformation efforts. digital.
Pig butcher shop scammers usually establish contact and develop long-term communication with the victims through various social media or dating apps. After earning victims’ trust over time, they convince them to invest in scam cryptocurrency platforms. Fake websites or apps allow victims to track their investment and show huge earnings which often stimulates further investments.
While the general public must learn to identify and avoid scams, “government, financial institutions and security companies should also take responsibility for managing growing risks,” said Jan Santiago, deputy director of Global Anti- Scam Org, at SC Media.
Indeed, although the scam targets consumers, it is often the responsibility of financial institutions to integrate fraud prevention mechanisms that could flag suspicious transactions, especially since the digital transformation of recent years has allowed crooks to carry out attacks more easily.
James Brodhurst, principal consultant at Resistant AI, said in a recent PaymentsJournal article that as fintech companies leverage software as a service to expand their business reach, they must counter web-based fraud-as-a-service tactics being deployed “at a level never seen before” and “with surprisingly low risk.”
He said AI and machine learning tools can “fight back and attempt to beat cybercriminals at their own game”, increasing detection rates and protecting automated systems from compromise.
Global Anti-Scam Org also suggested banks and trading platforms improve automated warnings, immediately reminding investors once a suspicious transaction is detected. Also, they should explain in detail to the general public how a particular type of scam works in order to create security awareness.
This last point aligns with the FBI’s own recommendations to consumers, which follow the best general standards: check the validity of any investment opportunity; be on the lookout for domain names that impersonate legitimate financial institutions, especially cryptocurrency exchanges; misspelled URLs, often with a slight deviation from the financial institutions’ actual website, should set off red flags; and don’t download or use suspicious apps as an investment tool unless you can verify the legitimacy.
To manage the growing vulnerabilities within the crypto market, financial institutions and cybersecurity organizations should also increase their own awareness, taking the time to explore tools not typically considered in traditional banking systems. , said Chen Arad, co-founder and COO of Solidus Labs, a provider of crypto-native risk monitoring and market monitoring. He specifically pointed to Web3 – the internet service which is built using decentralized blockchains.
And given that recovering funds after running a crypto scam is notoriously difficult, largely due to the immutability and anonymity of digital currency, initial risk management becomes critical, added Arad. “Crypto is a major opportunity to transform and monitor financial risk.”