Australia must combat money mules, AI-generated scams, even as losses abate, says expert

A report by behavioural biometrics company BioCatch says fraudsters are getting better at ‘doing their homework’ on targeted consumer accounts and that AI is their tool of choice.

BioCatch’s report found fraudsters were getting better at “doing their homework” on targeted consumer accounts.

Money lost to scams in Australia declined in the March quarter but consumers shouldn’t get complacent, given criminals are increasingly deploying money mules and artificial intelligence-generated voices or faces to dupe victims.

A new report by behavioural biometrics company BioCatch, which is backed by private equity firm Permira and Macquarie Capital, has found fraudsters are getting better at “doing their homework” on targeted consumer accounts, in some cases to collect more information to make a scam appear more legitimate.

That finding is despite a 48 per cent decrease in scam losses in the March quarter in Australia, compared to the same three months last year.

“It’s not a solved problem, there’s certainly a lot of work still to be done,” BioCatch Asia Pacific vice-president Richard Booth said.

“We are definitely seeing the use of AI technology by scammers to either build more convincing scams or to help with the automation of certain parts of the scam itself … you are seeing the use of voiceprint or even video deep fakes.”

The Australian Competition & Consumer Commission’s data showed scams cost Australians $2.74bn last year, with more than 601,000 reports being made. That was an 18.5 per cent jump in scam reports compared to 2022, despite a drop in 2023 in the amount lost.

BioCatch, which was founded in 2011, analyses thousands of physical and digital behavioural patterns to identify and prevent fraud and potential scam-related activities. It counts nine Australian banks as customers, including Suncorp, ANZ and National Australia Bank.

BioCatch’s latest report found while Australia was recording fewer fraud cases involving malware or remote administration tools, the nation was grappling with a spike in the volume of cases which led to at least one failed ­attempt to log into the victim’s ­account prior to a reported scam. That suggested scam­mers were returning for another crack at compromising their targets.

BioCatch also noted that money mule accounts were an issue for Australian banks, as well as for financial institutions across the Asia Pacific. BioCatch detected more than 150,000 confirmed mule accounts at banks across the region last year, and said criminals were outsourcing money laundering to crime syndicates that specialised in the activity.

BioCatch Asia Pacific vice-president Richard Booth.

A money mule is a person who receives funds from a third party into their bank account and transfers it into another account, typically receiving a commission.

The issue is also on the radar of Australia’s crime-frighting authorities. In February, the Australian Federal Police was among agencies that delivered a campaign to raise awareness of a trend in criminals recruiting ­“financially vulnerable” university students as money mules.

Mr Booth said digital banking had “inadvertently made it easier” for criminals to set up bank accounts.

“The Australian banks and the government agencies collectively have really woken up to the fact that mules is the other side of the scam coin,” he added.

Mr Booth said the data was, however, trending in the right direction in terms of scam losses declining, given government and industry initiatives to boost awareness and collaboration to combat scams.

He also noted more investment by banks in people, technology and processes was leading to increased detection and the foiling of more scams.

NAB group investigations executive Chris Sheehan said: “Scams are a global epidemic and we have a bank-wide scam strategy to reduce the impact of them on our customers.”

Rival Westpac earlier this year introduced a function that spurs AI-generated questions to pop up for customers if payments are deemed suspicious.

NAB is among banks including Barclays, Citigroup and HSBC that invested in BioCatch in 2020, as part of a funding round. Last month, Permira acquired a majority stake in BioCatch in a deal valuing it at an enterprise valuation of $US1.3bn. At the same time, existing BioCatch shareholders Macquarie and Sapphire Ventures raised their holdings in the company.