Many of experience processes where there's an appearance of 'something' being done, when the reality we're just experiencing 'theater'. Security theater, where we experience some 'safety procedure' that actually, when you think about it, isn't really making things safer. A close friend of security theater is shifting liability. They'll often go hand in hand - some 'security' process actually is just shifting liability from the company to you. We experience this with things like license agreements and terms of use (you read those, right?), or with hitting OK on the car navigation agreeing that it won't be used by the driver when driving. If something happens, well now, there's evidence you accepted or clicked, so it couldn't possibly be our fault, could it.
Fraud in banking is increasingly, with significant upticks since 2023. There are many reasons for this, but an obvious cause is the increase in the possible ways that we can be fooled - from text messages, app notifications, unsolicited phone calls, the modern world is a wonder. So it's reasonable to think that banks would be reacting by providing better ways to protect us from fraud, no? Sadly this is not the case, with the banks falling cleanly into the "let's ensure we can reduce our liability" camp.
Let's step through an example (note, I won't name the bank, as the patterns are shared among many banks). I had occasion to do a wire transfer (domestically to another US bank). Given all the details (ABA routing number, account number, address etc), I decided on the following process.
- Send a small wire transfer through to verify fund receipt.
- Go to a bank branch in person and execute the wire transfer using the same details as in (1).
I reasoned that if the first is successful then the second (bigger) transfer would go through without problem as all identification / verification would occur in branch, and they'd re-use the same transfer details on my account, so all should be fine.
Step 1 goes flawlessly. Step 2 is less smooth than I would like, as despite having done the smaller transfer, the bank staff had to re-enter all the details again, requiring me to re-check the ABA routing and account number etc. Poor, but OK.
As I'm leaving the branch, the very helpful bank member is embarassed to explain that I may receive a call from fraud prevention to followup before this is sent. "Even though I'm physically here and you've verified everything?". "Even so.".
So, 20 minutes later I receive a call from "Scam Possible". I let it go to voicemail and review a message from fraud prevention, and please could I give them a call back. I call the number on the back of my bank card, and then have to spend 15 minutes stepping through verification and a fixed set of questions around the purpose of the transfer, was I coerced, do I know the recipient, have I transferred money to them before, have I received money from them, until finally, do I acknowledge and accept the risk in making the transfer.
Then 30 minutes later I get another call from "Scam Possible", which is a repeat of the first. When I call up and ask why I'm having to repeat myself, there's no explanation.
So let's just break this down.
- The bank is calling me from a number that someone has identified as "scam". More bluntly, the fraud department is trying to educate its clients that it's a good idea to pick up calls and hand over PII.
- The bank had information about the recipient (in this case the receiver was me) and whether I'd transferred or received money before, but ignored it.
- There's nothing in the questions that bank is asking that protects me. In theory I could be being held at gunpoint and be forced to answer the questions the way I did.
- The bank is incompetent in its record keeping and has to go through the process twice.