How community banks are fighting back against fraud for Chicago-area customers

Financial fraud is becoming a routine experience for all too many Chicagoans.

According to recent industry research from Bankrate, 40% of Americans experienced a financial scam or fraud attempt in the past 12 months, up from 34% the year before. Over a lifetime, nearly three-quarters of Americans — 73% — have encountered some form of financial fraud, and 11% report actually losing money.

What’s driving the surge? Technology is making scams easier to execute and harder to detect. Artificial intelligence can now help criminals mimic voices, impersonating trusted contacts in ways that can be hard to recognize.

Here's what Chicago-area banking customers need to know to keep themselves, their families, and their finances safe this spring.

Fraud prevention starts with awareness

While fraud tactics are always evolving, many consumers are not up to date on the latest scams and how to spot them before losing money. The real vulnerability is human behavior. Fraudsters succeed by tricking people into revealing passwords, authentication codes or other sensitive information.

It’s important to note that no one who gets scammed ever thinks it could happen to them — until it does. Remember: Anyone can be targeted by a scam, and no one is immune. Awareness and knowing how to recognize suspicious activity is key.

Top consumer threats: Phishing, vishing and everything in between

For consumers, spoofed bank calls and account takeovers are becoming increasingly prevalent. One of the fastest-growing scams is “vishing,” or voice phishing.

Here’s how it typically works: A fraudster calls pretending to be from your bank. The phone number may look legitimate because criminals can spoof real numbers. The caller claims suspicious activity on your account and says they need to verify your identity.

They then ask for information like your password, authentication code or a one-time passcode. Once shared, the fraudster can log into your online account and initiate unauthorized transactions, frequently using peer-to-peer payment platforms like Zelle or Venmo.

This crime is sometimes mistakenly described as “payment app fraud,” but the real issue is that banking credentials were given away. A simple rule to live by: Your bank will not typically ask for your password or authentication code.

Protecting businesses from vendor payment instruction fraud

While phishing is still common in business settings, another scam businesses are at risk from is vendor impersonation.

In this scheme, a fraudster gains unauthorized access to — or convincingly mimics — a vendor’s email account and sends a message asking the business to update payment instructions for an upcoming invoice. The message looks legitimate, complete with real logos and professional formatting and language.

The business sends the payment using the new account information, only to discover later that the funds were redirected to fraudsters. By that time, the money has potentially been moved through multiple accounts and becomes difficult to recover. These scams can involve large sums, sometimes reaching hundreds of thousands or even millions of dollars. They typically target smaller businesses, which often have fewer fraud controls in place than large organizations.

A practical playbook for staying safe

Fraudsters may be getting smarter, but many of their efforts can be stopped with the help of a few simple habits.

Fraud prevention tips for consumers:

• Never share your password, authentication code or one-time passcode.

• If you receive a call or text claiming to be from your bank, hang up and call the bank directly using a number you already know.

• Never click links or downloads in texts or emails claiming to be from your bank. Instead, go directly to the bank’s official website or app to log into your account.

• Be cautious of messages that create urgency or fear. Scammers often pressure people to act quickly.

• Enable multifactor authentication whenever possible.

Fraud prevention tips for businesses:

• Always verify changed payment instructions using a known phone number.

• Require dual approval for wire transfers or large payments.

• Enroll in risk management solutions like positive pay, which allows you to review and approve payments from your business accounts.

• Treat “urgent” requests with caution, especially if they involve changing account details.

• Slow down and double-check requests to prevent costly mistakes.

How community banks can help catch fraud early

Technology plays a role in fraud prevention — but relationships matter too. Community banks tend to have an advantage here because we know our customers personally and understand their normal financial patterns.

One recent case in point: At a Byline branch, a longtime customer came in requesting a $30,000 wire transfer — something she’d never done before. Bank staff recognized the request as unusual and asked a few extra questions. They suspected something might be wrong and encouraged the customer to pause before sending the money.

Unfortunately, before the situation could be resolved, the customer visited a large national bank where the staff didn’t know her personally. The wire transfer was processed, and her funds were lost to fraud.

While no system prevents every scam, situations like this show the difference personal relationships can make. Community banks often have closer relationships with their customers, which can help identify unusual activity more quickly. Proactive community banks also invest in education, sharing alerts and regularly reminding customers about common scams and warning signs.

The bottom line? Stay vigilant

Fraud isn’t going away anytime soon. Criminals keep finding new ways to impersonate trusted institutions.

But consumers and small businesses alike can stay ahead of the threat with a simple mantra: My bank will never ask for my username, password or authentication code in a phone call or text message.

If someone pressures you to act immediately, that's your sign to slow down, hang up and call or stop by your bank immediately. That cautious stance can make the difference between stopping a scam or becoming its next victim.

• Megan Biggam is head of community banking at Byline Bank.