It may become mandatory for banks to compensate their customers for financial losses caused by fraudsters. This initiative was proposed to the Central Bank by one of the parliamentary parties. Invest Foresight spoke to Andrei Zhukov, Deputy Head of the Center for Media Practices at the Institute of Communication Management at the Higher School of Economics, to discuss the viability of this initiative.
– Fraudsters stole RUB250-300 billion from Russians in 2024, according to Stanislav Kuznetsov, Deputy Chairman of the Board of Sberbank. The amounts are growing every year. Is there a chance to reverse the trend?
– I took the trouble to find Stanislav Kuznetsov’s statement from a year ago, which said that in 2023, phone scammers stole RUB14.2 billion from citizens. Is that a 15-fold increase? It is hard to believe. Of course, the question arises of how they counted. I would still rely on the figures provided by the Central Bank. According to its data, in the first two quarters, there was something like RUB4 billion stolen in each period. In the third quarter, the Central Bank said that it had slightly changed its methodology and there was about 10 billion stolen. So, let’s say that the citizens’ losses from financial fraud estimated by the Central Bank are unlikely to exceed RUB40 billion.
– That is still a lot!
– Yes, of course, the figure is huge. And obviously, it says that the efforts being made are insufficient. But at the same time, I think that this is an issue not for banks and even not for the Central Bank to handle, but for law enforcement agencies and security services. That is why, at the last meeting of the Ministry of Internal Affairs, the President set the task for law enforcement agencies to intensify counter-measures against banking fraud.
– So, apparently, the main role in the fight against fraudsters belongs to…
– By law, it belongs to the Ministry of Internal Affairs, security services, and not to banks. I remind you that, for example, banks have no right to engage in investigative activities. And how can you catch fraudsters without this?
– Claiming that it is the banks that should take responsibility for the fraudsters, despite the popular dislike of bankers, personally makes me think of the following. Imagine a person comes to the housing and utilities service and says that it has become dark in their building. The light bulbs are all there and everything is as usual. But this person’s eyesight, unfortunately, has deteriorated. It is clear that they should not be complaining to the housing and utilities service. They should see a doctor.
– Recently, the State Duma has proposed that banks, with the assistance from the Central Bank, be required to reimburse citizens for monetary losses resulting from the actions of fraudsters. How viable and efficient is this initiative going to be?
– Most importantly, we must remember that next year will see parliamentary elections. And I believe that the closer they get, the more people will pursue the hype. Basically, we could adopt another law on combating bank fraud. As regards the deputies’ initiative, I see it as lacking specifics. We know that a special mechanism has been in place since mid-2024 that requires banks to return money stolen by fraudsters if the bank was at fault.
– But if the person is at fault?
– Good call. It would be wrong for a bank to operate under the principle of taking ‘responsibility for everything under the sun.’ This will open the door for a new fraud right away: two dishonest individuals may agree on a fraudulent scheme by transferring money and applying for a refund, the first one getting their money back and the other one profiting on it. Is that it? So I believe this is an inefficient idea.
– One needs to learn risk assessment themselves, right?
– True. Our laws state that you bear all entrepreneurial risks if you are involved in business. If you think you can invest money in another pyramid scheme to get a 1000% profit and choose to transfer money from the bank to this purpose, you have to deal with the outcomes; this is a risk you face as an entrepreneur. Obviously, the bank is not at fault.
– If the initiative gets approved, will the banks shift these financial risks to conscientious depositors and creditors?
– I believe that if this is the case, banks will hedge these risks as well through reducing interest rates and introducing related additional requirements to avoid losses.
– What are ways to protect yourself from fraud? Is there a magic bullet?
– First, I can see one encouraging sign: there is an increasing amount of social ads to warn people about bank scammers, telling them to be cautious and encouraging them to use their “inner spy” mode when receiving random calls from unknown numbers. This is good and proper. The more frequently people are reminded that they shouldn’t answer calls from unknown numbers and told about certain warning signs during the call, the better.
The general recommendations are simple: do not believe in miracles; unfortunately, they just don’t happen. Second, follow banking news and updates to avoid being deceived by all those stories of “indexing all bank deposits by tenfold.” And third, check all the information and learn fact-checking skills.
– The elderly are more vulnerable in this regard; they may find it hard to deal with new information.
– Indeed they are, hence the recommendation to keep their brain active. As we age, so do our brains, with slowing cognitive function; it takes longer to process and remember new information. Unfortunately, scammers are aware of it and often target older adults. This is why people should make efforts and train their brain for mental clarity.