Consumer-engaged fraud is now the leading type of fraud globally, representing more than a third (36%) of all reported incidents in 2024, up 15% over the prior year. It’s a costly and time-consuming challenge for financial institutions, exacerbated by the need to balance fraud prevention with customer experience.
In the contact center, we distinguish consumer-engaged from other types of fraud; when the consumer is involved, it takes a different set of tactics to detect and mitigate these attempts. We further break down consumer-engaged fraud into two categories: “persuaded,” when a consumer is coerced by a third party to access funds for fraudulent purposes; and “misuse,” when a consumer intentionally attempts fraud for personal gain.
Consumer-engaged fraud presents quite a dilemma, as it involves your most valuable assets – your own customers. It can also be rife with emotion: buyer’s remorse for an impulse purchase or anger over unauthorized items bought by family members. There’s a fine line between a legitimate mistake – perhaps a charge on an account that the customer truly doesn’t recognize – and an intentional attempt to benefit financially from misrepresentation. And as new schemes are popularized on social media and elsewhere, consumer-engaged fraud continues to evolve.
Consumer-engaged fraud comes in a variety of forms, including:
- Fraudulent loan applications, when individuals misrepresent or provide false information for financial gain when applying for a loan.
- Chargeback fraud, when a customer makes a legitimate purchase but disputes the charge with the bank, claiming they didn’t authorize it, and seeks a refund while keeping the goods or services.
- False fraud claims, when a customer fabricates a story about a fraudulent transaction, such as a purchased item was lost during shipping, to get a refund or avoid responsibility for a valid transaction.
As for why consumer-engaged fraud is on the rise, experts point to financial pressure during periods of inflation and the rising cost of living, both of which have been known to motivate consumers to find alternate ways to make ends meet. Also, increased institutional liability for scams, driven by regulation, may also encourage consumers to seek financial gain from .
So, how does a bank fight this rampant form of fraud that’s taken the top spot worldwide?
Advanced Technology with Human Touch
Fighting consumer-engaged fraud requires a combination of the right tools, skilled agents and consistent processes working together. With today’s advanced fraud-fighting and authentication tools, paired with the human touch of highly skilled contact center agents, consumer-engaged fraud is becoming easier to spot and manage. Here are some of the tools used to uncover and prevent consumer-engaged fraud in the contact center:
Authentication: Authentication is foundational and must be seamless. Contact centers can accomplish this by layering in multiple methods to confirm identity quickly and securely. This includes multi-factor tools, inbound number matching and conversational authentication. Additional solutions like passive voice verification can also analyze call behavior, voice patterns and risk signals without requiring the caller to pass through extra steps.
Behavior Monitoring: Artificial intelligence and machine learning can analyze consumer behavior and anomalies in real time to spot suspicious patterns, such as multiple large transactions in a short period or transactions from high-risk locations. These insights don’t just flag risk, they help inform how to route calls, when to ask for additional verification, or when to involve a fraud analyst.
Excessive chargeback activity is often viewed as a red flag for consumer-engaged fraud. Many contact centers are beginning to use data and analytics to monitor repeat patterns that may point to intentional misuse. While not all chargebacks are fraudulent, a pattern of frequent or high-dollar disputes can be an early indicator of abuse. Tracking this helps teams spot emerging risks – and ideally intervene before it escalates.
The Human Factor: Even with the most advanced fraud detection systems in place, human interaction remains the most powerful tool in the fight against consumer-engaged fraud. Agents need ongoing training on soft skills, such as building rapport and problem-solving, as well as techniques for recognizing and responding to potential fraud attempts. And with consumer-engaged scams continually evolving, fraud prevention protocols must be constantly updated and reinforced. Keeping your first line of defense informed and trained on how to spot deepfakes – when to listen for the speed or tone of the call, etc. – is imperative in today’s environment.
Balancing Security and Service
The contact center isn’t just on the front lines of service; it’s also on the front lines of security. Consumers expect seamless interactions with their financial institutions, so maintaining the delicate balance between frictionless service and vigorous protection is crucial.
Guarding against consumer-engaged fraud becomes increasingly difficult all the time. But with a sensitive and layered approach that employs intelligent technology and highly skilled agents, banks can deliver the trusted service and security their customers expect.
