Tech scams are alive and well in the USA. Scores of fines can be seen on DoJ and associated websites, and even smaller-scale fraudulent schemes have the potential to wrap up thousands of victims, as one recent case, in which a scammer was fined $13 million, has shown.
That this was a smaller event shows the pure scale of the challenge faced in the USA and the challenge that regtech and legaltech are facing to keep up and provide effective protection to businesses. Understanding the size and cost of tech scams is the first and most important step.
Quantifying The Costs
Often, the best way to appreciate the scale and importance of relevant reg and legal tech is to look at the relative costs being imposed on businesses. When it comes to tech scams, the costs are, according to official figures, fairly significant.
According to Federal Trade Commission (FTC) figures reported on by CNBC, consumers have been hit with over $8.8 billion in costs due to scams, and with that, huge reputational damage and cover costs to businesses.
There are deeper costs associated with tech scams, too. There are allegations that the tech industry as a whole is caught in a financial fraud tech scam storm, with reputations being torn to shreds and businesses incurring massive costs for not properly tending their own fence.
The rise of social media means that scams will continue to come thick and fast. It’s almost impossible to completely stop impersonations, frauds, and other schemes, so companies need to have rigorous legal and regtech to prevent exposure. The surface fines and costs are bad enough; the reputational cost can be disastrous.
How Regtech Can Help The Fight Against Tech Scams
Regulations are there to prevent tech scams and fraud, and so regtech has a natural foot in the market to help businesses preserve their reputation and prevent consumer losses. Tech scams commonly work through the compromise of user details. Regulations have placed safeguards in place to encourage businesses to protect these areas. Regtech can join that up.
According to Trulioo, multiple tools are being geared up for this purpose. Know Your Customer (KYC) services provide a framework through which regulations over bank ID can be easily measured and standards met, removing inefficiencies from the pipeline and meeting those stringent standards.
KYC is assisting companies with properly making ID verifications, building resilience in every step of the chain, and eliminating overlooked checks from administrative workers. Often, allowing malicious actors into accounts comes as a result of poor control of those credentials at a worker level; improving efficiency and reducing risk points is the key.
Introducing Legaltech
The world of tech scams is incredibly messy. As the Consumer Finance Bureau notes, liability can be attributed to numerous parties, and where liability rests can be a difficult question to answer. Is it the consumer who made the mistake? Is it the business who have been the target of the tech scam? Is it the federal body for not legislating with enough power?
For what legal protections are in place, it is essential that businesses build their awareness and embrace the benefits or issues that they present. This is where legaltech can step in.
Introducing legaltech tools into the end-to-end process of the business will enable it to make easy calls on whether or not its own liability has been reached and take a proactive approach towards ensuring that they are properly represented in any private or public litigation.
Start Protecting Your Customers And Your Business
Of course, businesses cannot take every step to ensure their consumers are fully protected. Nevertheless, the sheer scale and impact of tech scams show that companies must be switched on and ready to assertively tackle the scourge of these confidence scams and start putting steps in to protect their customers and businesses.
For most, this will be readily achieved through regtech and legaltech. Putting in absolute technical safeguards and reducing the chance of human error will, in turn, provide that extra layer of resilience required to help the business protect itself. Furthermore, as regulation becomes more stringent, having good standards of legal and regtech ready to go will provide businesses with a great foundation.