An innovative new team of fraud fighters created by Lloyds Banking Group in Leeds has already frozen £1million from fraudsters trying to trick people into receiving and transferring cash, This is Money can reveal.
Dubbed the ‘money mule hunting squad’ it was formed earlier in the year in an attempt to stop the movement of money snatched by scammers and shut down their ability to shift ill-gotten cash.
The pilot scheme has been such a success that the bank plans to share its secrets with its rivals, Paul Davis, retail fraud director, told us in a recent meeting in the City.
Whack-a-mule: Lloyds says that the problem of money mules has grown vastly – and set up a crack team to deal with it earlier in the year yielding impressive results
The team of ten has developed a number of new techniques to rapidly analyse data, spotting tell-tale signs, patterns and behaviour to halt fraudsters – although Lloyds doesn’t want to reveal the full tactics for security reasons.
In just four months, it has stopped £1million. For all of the frozen funds, Lloyds says it is contacting the sending banks in order to help them get the money back to victims.
Details of the crack team were revealed after This is Money grilled the fraud director on what the bank is doing to help stop financial fraud.
Last year, £236million was lost to scams, according to UK Finance.
Money mules are a rapidly growing part of the fraud landscape. Being a money mule – where individuals allow their bank account to be used to facilitate the movement of illegal funds – is a form of money laundering and comes with strict penalties.
There was a 27 per cent rise in 14 to 24-year-olds becoming money mules last year, as gangs target secondary school and university students with the lure of ‘easy cash’ largely via social media.
In response, last month Cifas and the PSHE Association launched four anti-fraud education lesson plans to raise awareness of this danger in secondary schools.
Paul Davis, retail fraud director at Lloyds Banking Group, said: ‘Helping keep our customers’ money safe is our priority.
‘Our mule-hunting team was formed as a collaboration between our fraud, anti-money laundering, IT and innovation teams to create new ways that we can use the data, technology and expertise in our fraud-fighting armoury to explore, develop and test new cutting-edge tactics.
‘We’ve been successful because we haven’t just been looking out for large credits arriving into accounts and blocking this money.
‘It’s much more complicated than techniques focused solely on amounts that often relate to genuine purposes – such as buying a house or paying for medical costs, car, weddings or holidays.
‘Fighting financial fraud is a concerted effort between the banks, the police and all of us.
‘The more we all know about how to spot it, the more people we will save from being victims. We are sharing our findings as part of this project with other banks in order to share expertise.’
The initiative, Paul says, is part of a multi-million pound investment in advancing Lloyds’ defences over the next three years.
Lloyds Bank: This is Money met up with head of retail fraud Paul Davis
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One of the big questions around fraud is where stolen money ends up – and how fraudsters manage to open a current account to move cash in the first place.
Paul says only around one in 50 cases are mule accounts opened with fake ID.
They are most often either unused accounts previously belonging to genuine holders who sell them on to criminals, or existing accounts held by criminals to be used to receive the proceeds of scams.
The offer of quick cash is being used by criminals most commonly on social media to recruit money mules, Lloyds says.
It points to data from last year that shows 8,652 18-24 year-olds were already lured into working with fraudsters between January and September.
Scams: The first scam, on Instagram and second, on Facebook, were investigated by Lloyds and found to be attempts to lure people into becoming money mules
When someone acts as a ‘money mule’, their bank account is used to receive criminal cash.
Young people need to be aware of fraudsters using fake job ads, targeted emails and social media ads promising cash in exchange for making bank transfers or withdrawing and depositing money.
If caught moving fraudulent funds, unsuspecting mules will be left with no bank account, a damaged credit score and the inability to apply for a mortgage, loan or even a phone contract in the future.
They could also face up to 14 years in prison – although, as Paul points out, it tends to be gang leaders who are the ones who face custodial sentences.
Fightback: Lloyds has begun alerting what it believes are high-risk customers when setting up a new payment