Major banks warn of rise in little-known ‘CEO fraud’

By Liam On Feb 29, 2024

A major bank is warning of little-known ‘CEO fraud’ fraud that has seen victims lose an average of almost £11,000 in the past year.

This is a less common scam, which Lloyds Bank has seen a resurgence of, resulting in the highest average loss amount of this type of scam.

Using this ruse, scammers pose as a senior employee of a company and contact the victim (usually an employee of the same company) telling them that they need to make an urgent payment.

Lloyds Bank has warned of a little-known and fast-growing ‘CEO fraud’, with customers losing an average of almost £11,000

This could be an invoice that they claim needs to be paid, but which they cannot create themselves.

Or they may ask the victim to purchase multiple gift cards for other staff members, under the guise of a “bonus.”

The warning comes as cases of impersonation have increased by 13 percent in the past year.

In 2023, victims of impersonation scams lost an average of more than £3,000, compared to more than £3,400 the previous year.

However, those who fell victim to ‘CEO fraud’ were swindled out of the most money by impersonating scammers, as victims lost an average of £10,918 to the scam last year.

What is impersonation scam?

Impersonation occurs when a fraudster tricks his victim into making a payment or providing personal or financial information by pretending to be someone else.

Scammers often pose as police officers, bank staff and HMRC, although they can also pose as employees of a large company such as Amazon.

Sometimes criminals pose as a friend or family member and come up with reasons to ask for money, such as if they are stranded with a broken phone or if they urgently need to pay a debt, rent or bill.

These scams often start with a phone call, text message or email. They can also reach out via social media.

Fraud by police or bank employees

Scams where scammers pose as police officers or bank employees have become the most popular form of impersonation scams, but victims of ‘CEO fraud’ still lost more than double the amount lost by those duped by scams by police or bank staff.

Not only is police or bank employee fraud the fastest growing form of impersonation scam, but data from Lloyds Bank shows it was also the most common.

Fraudsters engaged in bank impersonation claim that the victim’s bank account is at risk and ask them to move their money to a ‘safe account’.

They may ask their victim to download an app to transfer the money securely, but in reality the victim is handing over access to the account to a criminal.

When the fraudster pretends to be a police officer, he usually tells the victims that they need help with a police investigation involving their bank, and then asks them to transfer money to another account, thus helping a criminal’ to catch’.

These scams have been successful for fraudsters because they can take advantage of the authority of these professions and the trust that victims have in them.

Although the number of cases has increased, figures show that the average amount lost to police and bank scams has fallen by 31 per cent in the past year, with victims losing an average of £5,318, compared to more than £7,700 the previous year.

Other forms of impersonation to be aware of

Victims of other types of impersonation scams lost an average of more than £1,870 last year. This includes cases where a friend or family member is impersonated on WhatsApp, known as ‘Hi Mom’ scams.

Another common trick for scammers is to pose as retail giant Amazon, knowing that many consumers regularly shop online.

Victims will be contacted and told there is a problem with their Amazon account, or that they should receive a refund, and then asked to fill out a form, click a link, or download software – ultimately these are all ways where scammers can gain access to the victim’s personal data.

Scammers are becoming more sophisticated with their impersonations and no longer rely solely on impersonating big, well-known brands.

In 2023, Lloyds Bank also saw reports of scammers posing as tradesmen such as plumbers and gardeners.

How to avoid falling into an impersonation trap

Be wary of calls or texts you receive from numbers or email addresses that aren’t already saved in your contacts, even if they appear to be from someone you know.

Under no circumstances will your bank, the police or any genuine organization or company ask you to transfer money or give out your card details – always remember that.

They will also never ask you to download anything to your computer or other device. If in doubt, hang up and call to verify using a number you trust, not the number given to you over the phone.

Be careful if you are contacted and asked to fill out a form online to process a refund. Contact the organization. Use the data you looked up elsewhere and not the data provided on any form so that you can verify that the request is genuine.

Do not download software to your computer, tablet or phone if instructed to do so by an unsolicited caller. This often comes in the guise of someone from “Microsoft” claiming to help resolve a problem or security issue with your computer, but fraudsters can also pose as employees of Amazon, utility companies, or banks.

The bottom line is that you should always double check and don’t rush into anything. If a WhatsApp or text message claims to be from someone you know, contact them some other way to confirm that they really are who they say they are.

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