The trend: According to a PYMNTS study sponsored by Block, 42% of scam victims consider changing to a new bank, and 19% have done so. That may be nearly 10 percentage points higher than bank switching in the general population.

The data: The most prevalent scams respondents reported were initiated by phone call (19%) and email (18%), while Gen Zers cited social media (24%). Victims reported that 29% of scammers posed as a trusted company or provider, 23% as a fake person, 14% as a technical expert, and 11% as a financial institution (FI).

In a scam event, according to the study, the bank is frequently part of the consumer reaction: 77% of victims who lost funds to scammers reported the fraud event to their FI. And that communication paid off: Among respondents who reported a fraud event that led to a financial loss, 53% recovered most or all of their funds.

Zoom out: FIs have three types of social engineering-enabled fraud tactics to defend their customers against: Giving up account credentials, giving up an account number, or authorizing a payment. FIs cannot control their customers’ offline behavior or criminals’ tactics, but the right technology can stop payment fraud when customers have fallen for a scam.

Solutions like step-up authentication, device intelligence, behavioral biometrics, and dynamic risk scoring lower the risk of fraudsters gaining access to customer accounts. Even when the scammers have credentials, these strategies block transactions that seem odd even if initiated by a customer. The bank protects consumers from themselves without telling them what to do and minimizes its own fraud costs.

Our take: For FIs, scams create a customer perception issue. The financial losses FIs face from compensating customers for fraud and chasing down lost funds may eclipse their loss of business from customers who have been scammed.

FIs’ brand value may also fall when they fail to put in place the right protections. To keep their sterling reputation intact and retain their customers, FIs must guard their customers from the consequences of scams that occur via multiple channels.