You might think Lloyds Bank’s director of fraud would fancy a break from the day job, but Paul Davis likes to spend his time off reading crime novels.
‘It’s not an admiration thing for the crooks’, he says. ‘I read it for the cops and what the cops get up to’.
But while Davis normally prefers fiction, a non-fiction book he read about con artists while on holiday in Italy in 2017 – though hardly your typical beach read – gave him some ideas for when he got back to his desk.
As Paul tells me this, sitting across a long table in a meeting room in Lloyds Bank’s offices in the City of London, to my right sits the author of ‘The Confidence Game: Why We Fall for It… Every Time’.
Poker face: Paul Davis and psychologist, author and poker player Maria Konnikova teamed up to help revamp the bank’s approach to scams
She is Maria Konnikova, a Harvard and Columbia educated psychologist, author and, in recent years, professional poker player – she has reportedly won over $200,000.
Suitcase packed behind her chair, she is due to fly back to New York that afternoon following four ‘quite intense but interesting’ days after being parachuted into the freezing London rain to assist in Lloyds’ fight against fraud.
Big banks have spent millions of pounds on sophisticated scam prevention systems in response to customers losing millions more to scammers convincing them to transfer funds to them.
Last summer, Lloyds said its ‘cutting-edge new tool’, known as ‘The Rat’, had already prevented more than £4million in fraud.
But despite these inventions, the scams go on and the sums lost to push payment fraud get bigger.
In total, £148.2million vanished in the first six months of 2018 compared to £207.5million in the first half of last year.
All the technology in the world doesn’t matter after all if someone still clicks ‘send’.
Paul admits: ‘Quite often the solutions we’ve been throwing at the problem tend to be technological.
‘But this fraud has a very human element to it, and you can have the best systems to detect unusual payments in the world, but unless you have a high quality conversation with the customer which actually takes account of their mental state while they’re being scammed, you might as well turn them off.’
This, he says, is why Maria is here.
Essentially, to assist the bank in revamping its fraud warnings, and use her knowledge of con artists, con victims and human decision making to help one of the UK’s biggest banks better talk to its customers.
The 36-year-old’s student profile when she was studying for her PhD at Columbia University in New York said she was interested in ‘the effects of hot and cool emotional states on self-control ability and decision making, especially under risk and uncertainty.’
Konnikova, 36, has especially focused on the psychology of human beings in ‘hot states’, and said in such situations we’re far likelier to fall victim to scammers
Being called and asked to transfer money, she says, whether it’s someone claiming to be your bank, HMRC or the police, is likely to put you in such a ‘hot state’.
‘When we’re in a state like that, we stop thinking rationally. We stop thinking objectively, we become incredibly subjective. We stop seeing logical inconsistencies.
‘There’s a lot of really interesting psychological work on when people are able to spot logical flaws in arguments, when they’re able to spot red flags, and it turns out when you’re emotional or in the midst of a story, you stop seeing things you would’ve seen otherwise.’
The aim then is to get someone out of that kind of state.
‘I think what we’re trying to accomplish here is cool someone off’, she says, ‘and one of the ways you do that is by forcing them to take a breath, take a step back, realise no matter what type of con it is, that nothing has to be instantaneous.’
‘If someone’s telling you they need money right now, that’s a problem. How do you get people to reflect, to take a pause, to take a break?’
To think logically – more like the focus of one of her previous books, fictional detective Sherlock Holmes – than a flustered person thinking they’re about to be fined unless they send money to the taxman right that second.
‘What we wanted to do’, Davis explains, ‘was bring in somebody with an external perspective and expertise, and someone who has spent a lot of time with victims, and with fraudsters, and who understands their mental state, and their psychological state, to help us make our warnings even more effective, even better.’
Maria Konnikova’s first book focused on thinking like the hyper-logical Sherlock Holmes. She changed tack completely with her follow-up, which focused on the psychology of cons. Her upcoming third book is charting her journey to becoming a professional poker player
Seven types of fraud to battle
It’s been a lot to cram in in a short space of time. I’m handed a list of seven types of push payment fraud, from romance scams, to scams promising high investment returns to ‘safe account’ impersonation fraud.
Seven deadly scams:
Over the four days, Maria Konnikova worked with Lloyds’ fraud team on warnings for seven types of authorised push payment scam.
– Purchase scams: Where the victim pays in advance for goods or services that are never received.
– Investment scams: Where the victim pays for a fake Investment which offers high returns.
– Advance Fee scams: Where the victim pays a fee which they believe will result in the release of a much larger payment or high-value goods.
– Romance scams: Where the victim pays money to a person they believe is romantically involved with them.
– Impersonation scams: Where the victim is contacted by the scammer who pretends to be from the police or the victim’s bank and convinces them to make a payment to a ‘safe’ account owned by the fraudster, or to pay a non-existent fine.
– Invoice scams: Where the victim attempts to pay an invoice to a legitimate payee, but the scammer intervenes to convince the victim to redirect the payment to the scammer’s account.
– CEO scams: Where the victim attempts to make a legitimate payment but the scammer intervenes by impersonating the CEO or other senior executive of the victim’s organisation to convince them to redirect the payment to the scammer’s account.
Maria says: ‘We’ve talked about all of these, and figured out wording and approaches, and the ways to think about all of them, not just for online scams.
‘We listened to some calls and figured out, how do you want people to talk to people on the phone once they’re on the phone, in-branch, how do you want tellers to talk to them.
‘Everyone has different tools at their disposal, right?’
What are some of the things they’ve come up with? Maria diplomatically insists some of the bank’s existing fraud warnings ‘were good’, but the key focus is ‘simplicity’.
Rather than long, logical messages describing in detail what is going on, the focus should be on the ‘most important thing we want people to take away.
And how do we present it in a way that has the most impact, that’s going to have no noise, that’s going to be direct, that’s going to appeal to them directly.’
Paul boots up a PowerPoint presentation to show off some prototypes.
For example, not ‘did your bank call you’, but ‘did we call you? Did we tell you move money?’ Click yes on this, and you’re greeted by a big red warning triangle which declares: ‘This is a scam.’
Again, the aim, they say, is simplicity. ‘Don’t say this “may be a scam”, say “this is a scam”‘, Maria says.
‘If Lloyds has just called you to tell you to move your money…’, Paul finishes off her sentence: ‘It will be a scam.’
That’s for sending money online, while if you’re talking to someone on the phone, she insists it needs to sound personal, not scripted.
‘I understand why you need scripts, you know, you’re a bank’, she says. ‘But the moment a victim thinks you’re using a script they shut down.
‘You want to make sure nothing sounds like a script, that it sounds personal, and you need to treat victims as people.’
‘We’ve got some of the best data scientists in the industry who are looking out for unusual transactions’, Paul says, like the ones which may trigger a warning like the one he’s shown me in the first place, ‘but how are we going to leverage that?
‘And we can only get the true power of that if we give customers a warning likely to make a difference to their behaviour.’
Maria says: ‘Rather than having one blanket warning, how do you actually break it up so everyone sees just the one warning that applies to the fraud they’re most likely experiencing?’
While the pair sound fairly satisfied with what they’ve accomplished, there appears to be no suggestion after four days of work that this is job done, fraud beaten, minds completely changed.
‘None of this can stand still’, Paul says. ‘No’, Maria adds, ‘because con artists don’t stand still. The moment you say “we’ve got this”, is the moment it stops working.’
In the high stakes battle against online fraud, there is always another round to play. As someone increasingly used to the poker table, Maria Konnikova probably knows that better than most.
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