Financial Crime World

Germany Lags Behind in Scam Reimbursements as Impersonation and Investment Scams Thrive

A recent report by BioCatch, a global leader in digital-fraud detection and financial-crime prevention powered by behavioral biometric intelligence, has highlighted the alarming rise of impersonation and investment scams in Germany. The report reveals that victims of these scams receive fewer refunds than those scammed elsewhere in Europe.

Impersonation and Investment Scams Plague Germany

According to the report, native German-speaking individuals residing in Eastern Europe are responsible for most of these attacks, which often target German victims who trust them due to their language skills. This contrasts with English-speaking countries, where most scams originate from Asia.

Room for Improvement in Financial Regulation

Despite having some of the best financial regulation in the world, BioCatch Director of Global Fraud Intelligence Tom Peacock notes that there is still room for improvement. “Germany’s Federal Financial Supervisory Authority (BaFin) has been effective in identifying and issuing regular alerts about prevalent investment scams,” he said.

Lagging Behind in Online Banking and Mobile-Payment Adoption

However, Germans may be lagging behind other European nations in adopting online banking and mobile-payment systems. BioCatch’s first-ever Germany fraud trends report shows that annual growth in mobile-payment adoption rose by nearly 44% last year, bringing with it new risks of fraud and financial crime.

The Impact of Generative Artificial Intelligence (GenAI)

The report also warns of the impact of GenAI on Germany’s banking industry. GenAI can craft sophisticated scams that impersonate officials or loved ones, making them difficult to detect. “In the future, GenAI tools will be able to identify potential victims, build a dossier of their weaknesses, and automatically devise and refine attacks,” said BioCatch Regional Vice President Paul Davis.

Key Findings from the Report

  • Germans are less likely to receive scam refunds than others in the EU due to legislation that requires banks only reimburse victims of unauthorized fraud.
  • Online banking is often tedious in Germany, with a reduction in risk-tolerance among financial institutions leading to added friction and headaches.
  • Lack of crypto understanding leaves more than 60% of the population susceptible to falling victim to a crypto scam.
  • Less than 40% of Germany uses advanced digital banking services, such as online account applications or digital wallets.

Safeguarding Against Scams

To safeguard against these threats, BioCatch offers its Connect solution, which analyzes thousands of user interactions to support a digital banking environment where identity, trust, and ease coexist. The company’s expertise in behavioral biometric intelligence grounded in advanced cognitive science and machine learning has helped more than 30 of the world’s largest 100 banks and over 180 financial institutions combat fraud and facilitate digital transformation.