This is my presentation about telephone fraud which is quite prevalent in Lithuania and many other countries around the world.

1. 1
It’s Not a Rocket Science:
Defrauding Banks’ Customers by
Phone
University of Portsmouth
3rd
of June, 2014

2. 2
These days everyone seems to be
afraid of them, right?

3. What is Telephone Fraud?
• A fraudster uses a pre-paid mobile phone for calling potential
victims at random
• Introduces himself as a police officer
• Uses psychological intimidation techniques to scare victims into
believing that their bank accounts are being used by organized
crime and corrupt bank staff to launder money
• Imitates that a victim’s call is being redirected to the bank’s call
centre
• Obtains victim’s online banking login details and transfers victim’s
money to the accounts controlled by the criminals
• In addition, fraudsters often use victim’s online banking facility to
obtain small loans in the victim’s name from the pay day loan
companies
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4. Online Banking Facility
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5. Variations of Telephone Fraud Before
2010
• Known as ‘It’s me, mother!’ fraud
• Fraudsters called random numbers usually late in the evening
or at night,
• Pretended they were close relatives (e.g. sons or grandsons)
who had just caused traffic accidents and seriously injured
someone; therefore they needed money to sort out the
problem (i.e. bribe a police officer, lawyer, etc.).
• If distressed victims complied, accomplices promptly turned
up at the victims’ addresses to collect bribe money
• Another variation of this fraud involved text messages about
lottery winnings which could be claimed only after purchasing
top up codes for prepaid GSM cards
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6. 6
Variations of Telephone Fraud After 2010
• Crooks finally discover they can
target customers who use online
banking facility
• Initially target job seekers whose
details can be obtained through
classifieds online / newspapers,
etc
• However, criminals soon invent
and utilize the law enforcement
angle and start targeting just
about everyone
Houston,
we have a
problem!

7. Old Variation vs. New Variation
• Limited gain
• Limited range of potential
victims
• Requires physical contact
• Difficult to recruit couriers
• Significantly increases gains
• Everyone’s a potential target
• No physical contact with the
victims
• Abundance of money mules
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8. 8
According to the Lithuanian
police, 95 per cent of
fraudulent phone calls
originate in Lithuanian
prisons
(Source: Respublika, 12th
of March, 2012)

9. Telephone Fraud Statistics from SEB
Bank
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No. of
Victims
Total Loss /
LTL
Pay day
Loans / LTL
No. of Money
Mules
2012 97 428 000,00 144 000,00 89
2013 273 1 467 588,00 252 484,00 340
2014 (1st
Q) 16 57 127,00 9 782,00 22
Total 386 1 952 715,00 406 266,00 451
NB! One British Pound = 4,3 LTL

10. Police Statistics on Telephone Fraud,
2012
• Registered 816 telephone fraud
incidents
• Total estimated loss: 2 782 000,00
LTL
• Total cost of police investigation:
• 1 200 000,00 LTL
• Number of confiscated phones in
prisons – 7 884
(Source: Lietuvos Rytas, 15th
of May, 2013)
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11. 11
Profile of a Victim
• The majority of victims – 95 per cent - are women
• Average age - 55 years old
• Average loss – 5 376,00 LTL
• Many victims had been aware about telephone fraud
and its modus operandi (Suzuki, K., 2010)
• In addition to financial loss, victims often suffer loss of
self esteem, because they blame themselves for
having been ‘so stupid’
• The society contributes to this social stigma by
labeling victims as gullible or plain stupid (University
of Exeter, 2009)
• In other words, it is the victim’s fault or as the old
adage has it - ‘A fool and his money are soon parted’
• Additionally, this type of fraud undermines confidence
general public has in public and private institutions
and erodes sense of security in everyday life (Suzuki,
K., 2011)
Stupid cow!
How on earth
could I fall
for that!?

12. 12

13. 13
Profile of a Money Mule
• The average age of a money mule is
28-30 years old
• Often these individuals are
unemployed recipients of social
benefits from the state
• Most of them know that their
involvement facilitates criminal activity
• However, when one bank closes their
accounts, they open a new one in
another bank and continue to assist
telephone fraudsters
Bank
accounts
for sale!

14. The Fake CEO/CFO Scam
• A multinational company makes a public announcement about its intentions to
divest in certain regions/countries
• A couple of days later a regional CFO employed in a subsidiary of the
multinational company receives a telephone call from someone who claims to be
the CFO of the parent company
• The fake CFO tells the victim the matter is very confidential since it’s related to
the sale of the parent company’s business in the region
• An accomplice poses as a female lawyer and e-mails a confidentiality agreement
to the victim
• The duo convince the regional CFO to make an urgent international transfer of
more than 400 000,00 EUR to a business bank account in Lithuania
• The funds are subsequently diverted to the banks’ accounts in Cyprus, Israel,
Thailand and Romania
• The time between the first telephone call and the actual transfer of money is less
than one hour
• All information about the victim company and the individuals affected was
harvested online (e.g. LinkedIn profiles, press releases, etc.)
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15. 15
Implications for the Banking Industry
• The banks aren’t directly affected since they do not
compensate losses to the victims of fraud
• However, since this type of fraud targets users of
electronic banking, some customers might stop or be
reluctant to use this products, and this might have some
impact on the long term plans of the banking industry
• Additionally, fraudsters might start targeting SMEs or
invent new and more elaborate fraudulent schemes
• Finally, if the incidence of telephone fraud continues to
increase, the regulator might step in and introduce new
rules

16. How do we tackle telephone fraud?
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17. 17
How do we tackle telephone fraud
(cont’d)?
• Training staff to identify customers who are at higher risks, so they
could provide customers with relevant advise on risk mitigation
techniques
• Advising staff on how to identify potential money mules
• Raising customers awareness through communication campaigns in
the news media, etc.
• Reduction of daily transfer limits for customers who do not want to
replace password cards with TAN generators
• Employing an internally developed monitoring software that detects
and suspends suspicious transactions
• Addressing this issue to various stakeholders – police, department
of prisons, telecommunication companies, etc.
• Assisting Vilnius University with a research on the victims of
telephone fraud

18. Remaining Challenges
• Banks are reluctant to exchange fraud statistics
• Banks do not exchange data on fraudsters and money mules
• Banking legislation doesn’t provide any guidance on how banks
should deal with fraud
• Police do not compile comprehensive statistics on telephone
fraud
• ‘It’s your own fault’ attitude prevalent towards the victims of
telephone fraud
• Fraudsters are always one or two steps ahead; therefore, they
eventually come up with new variations or target new
products/channels (e.g. Germany, Latvia and Estonia (Source:
Lietuvos Rytas, 5th
of August, 2013)
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19. 19
Variations of Telephone Fraud in Other
Countries
Courier Fraud (UK) Ore-Ore Sagi / Furikome Fraud (Japan)

20. Variations of Telephone Fraud in
Other Countries (cont’d)
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Voice Phishing Fraud (South Korea) Tелефонные Mошенники (Russia)

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If this particular type of fraud is of
further interest:
• Use Google to find out more variations around
the world:
– Voice Phishing (South Korea)
– Virtual Kidnapping / Telephone Extortion (South America)
– Courier Fraud (United Kingdom)
– Ore-ore Sagi / Furikome Fraud (Japan)
– Jamaican Lottery (USA)
– Telefon Betrug / Schockanrufen (Germany)
– Tелефонные Mошенники (Russia)
– Faux Neveu / Faux président (France, Switzerland)
– Metoda Accidentul (Romania)
– Grandparents Scam (North America)
– And many many more…

22. Thank you for your
attention!

23. If you’re interested in this topic, you’re welcome
to get in touch with me through
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