FBI Warns of Increased Fraud Risk

June 16, 2020

With more people using mobile banking applications during the COVID-19 pandemic to transfer funds and cash checks, the FBI issued a warning that cyber actors will exploit these platforms.

US financial technology providers estimate more than 75 percent of Americans used mobile banking in some form in 2019. In a public service announcement, the FBI reported that studies of U.S. financial data indicate a 50 percent surge in mobile banking since the beginning of 2020. Additionally, studies indicate 36 percent of Americans plan to use mobile tools to conduct banking activities, and 20 percent plan to visit branch locations less often. With city, state and local governments urging or mandating social distancing, Americans have become more willing to use mobile banking as an alternative to physically visit branch locations. The FBI expects cyber actors to attempt to exploit new mobile banking customers using a variety of techniques, including app-based banking trojans and fake banking apps.

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App-Based Banking Trojans

The FBI advises the public to be cautious when downloading apps on smartphones and tablets, as some could be concealing malicious intent. Cyber actors target banking information using banking trojans, which are malicious programs that disguise themselves as other apps, such as games or tools. When the user launches a legitimate banking app, it triggers the previously downloaded trojan that has been lying dormant on their device. The trojan creates a false version of the bank's login page and overlays it on top of the legitimate app. Once the user enters their credentials into the false login page, the trojan passes the user to the real banking app login page so they do not realize they have been compromised.

Fake Banking Apps

Actors also create fraudulent apps designed to impersonate the real apps of major financial institutions, with the intent of tricking users into entering their login credentials. These apps provide an error message after the attempted login and will use smartphone permission requests to obtain and bypass security codes texted to users. US security research organizations report that in 2018, nearly 65,000 fake apps were detected on major app stores, making this one of the fastest growing sectors of smartphone-based fraud.

Tips to Protect You and Your Organization

  • Obtain Apps from Trusted Sources: Private sector companies manage app stores for smartphones and actively vet these apps for malicious content. Additionally, most major US banks will provide a link to their mobile app on their website. The FBI recommends only obtaining smartphone apps from trusted sources like official app stores or directly from bank websites.
  • Use Two-Factor Authentication: Since 2016, surveys of application and website users have identified that most users do not enable two-factor authentication when prompted. These users cite inconvenience as the major reason to avoid the use of this technology. Cybersecurity experts have stressed that two-factor authentication is a highly effective tool to secure accounts against compromise, and enabling any form of two-factor authentication will be to the user's advantage.
    • Do:
      • Enable two-factor or multi-factor authentication on devices and accounts to protect them from malicious compromise.
      • Use strong two-factor authentication if possible via biometrics, hardware tokens, or authentication apps.
      • Use multiple types of authentication for accounts if possible. Layering different authentication standards is a stronger security option
      • Monitor where your Personal Identifiable Information (PII) is stored and only share the most necessary information with financial institutions.
    • Don't
      • Click links in e-mails or text messages; ensure these messages come from the financial institution by double-checking e-mail details. Many criminals use legitimate-looking messages to trick users into giving up login details.
      • Give two-factor passcodes to anyone over the phone or via text. Financial institutions will not ask you for these codes over the phone.

Use Strong Passwords and Good Password Security

Cyber actors regularly exploit users who reuse passwords or use common or insecure passwords. The FBI recommends creating strong, unique passwords to mitigate these attacks. The National Institute of Standards and Technology's most recent guidance encourages users to make passwords or passphrases that are 15 characters or longer.

    • Do:
      • Use passwords that contain upper case letters, lower case letters, and symbols.
      • Use a minimum of eight characters per password.
      • Create unique passwords for banking apps.
      • Use a password manager or password management service.
    • Don’t:
      • Use common passwords or phrases, such as "Password1!" or "123456."
      • Reuse the same passwords for multiple accounts.
      • Store passwords in written form or in an insecure phone app like a notepad.
      • Give your password to anyone. Financial institutions will not ask you for this information over the phone or text message.

Contact ALTA at 202-296-3671 or communications@alta.org.