How Retirement Account Fraud Has Tripled
Retirement and brokerage accounts saw a jump in fraud cases last year, according to news reports.
Fraud related to retirement accounts made up 9% of non-credit and debit card fraud in 2018, compared to 3% in 2017, according to a recent study by the Greenwich Associates firm Javelin Strategy & Research cited by WealthManagement.com.
Scams involving brokerage accounts rose from 7% to 10% of non-card fraud during the same time, the web publication writes, citing the study. Victims paid $1.7 billion out-of-pocket in 2018 for non-card fraud, which is double the amount they paid the year prior, according to WealthManagement.com.
Non-card fraud cases have increased despite many financial institutions introducing two-step authentication, the web publication writes. Scammers are becoming more adept at taking over mobile phone accounts to gain temporary passwords, with the number of victims of such cases doubling to 680,000 last year, according to WealthManagement.com.
The rise in retirement and brokerage account scams is in part attributable to a reduction in fraud involving credit and debit cards, the study’s authors say, the web publication writes.
Card fraud affected 14.4 million consumers last year, compared to 16.7 million the year prior, thanks in large part to the proliferation of electronic chip-embedded cards, according to WealthManagement.com.
And the drop in card fraud means scammers are looking elsewhere, the web publication writes.
“Given the agility and tenacity demonstrated by fraudsters in 2018, financial institutions should assume that every account type will be under greater pressure going forward,” said Jim Johnson, executive vice president of financial institution payments and wealth at technology firm FIS, which sponsored the study, according to WealthManagement.com. “Adequately defending customers from these new security assaults will require the development and adoption of next-generation fraud mitigation strategies.”