UK banks and telecom giants launch "Scam Signal" to stop fraud in real time

LONDON, Nov. 5, 2024 — UK Finance and GSMA have partnered with prominent UK banks and telecom companies to launch "Scam Signal," a sophisticated new tool aimed at strengthening fraud prevention through real-time API collaboration.

The Scam Signal initiative brings together major mobile network operators (MNOs) like EE, Virgin Media O2, Three, and Vodafone with leading banks, including NatWest, to better protect consumers from APP scams, which have caused significant losses to customers and banks alike.

In the first half of 2024, criminals stole £213.7 million through APP fraud in the UK, with an estimated 35% of these losses originating from telecommunications channels, often through fraudulent phone calls or SMS messages that persuade victims to transfer funds.

“This collaborative effort with GSMA has allowed us to take a major step forward,” said Dianne Doodnath, principal of economic crime at UK Finance. “Together, we’ve developed a solution capable of spotting criminal activity in real time and proactively stopping fraudulent transactions before they can harm customers.”

A New Model of Cross-Industry Collaboration

Scam Signal represents a new level of cooperation between the UK’s banking and telecommunications sectors, led by UK Finance and the GSMA, which have created a framework for banks and telecom companies to share data on fraudulent patterns. This cross-industry initiative enables both sectors to identify fraud risks early and act swiftly, providing banks with more context about transactions and allowing telecom operators to monitor communication trends.

To facilitate this, both industries have established shared fraud data channels, where suspicious activity is reported and reviewed. Forums and working groups are also in place to ensure continuous collaboration and updates on emerging threats. “Scam Signal is already demonstrating the potential impact of collaborative intelligence,” said Brian Gorman, fintech lead at GSMA. “By combining expertise and resources from both sectors, we’re able to track fraud schemes more comprehensively.”

The Payment Systems Regulator (PSR) and Ofcom, the UK's communications and financial regulators, have also supported these efforts.

Both agencies have advocated for integrated fraud detection systems that address the overlapping vulnerabilities in telecom and banking services, helping to enhance Scam Signal’s effectiveness and ensuring compliance with regulatory standards.

How Scam Signal Technology Works

Scam Signal operates by analyzing real-time network data to identify unusual call or messaging patterns, which can indicate fraudulent behavior. If a high-risk call occurs while a customer is making a significant banking transaction, the system assesses this as a potential scam in progress. The technology then correlates these communication signals with the transaction data, which is securely shared with banks through an Application Programmable Interface (API).

Through the API, banks receive immediate alerts for suspicious transactions, allowing them to act quickly to prevent potential fraud. This high-speed data exchange between banks and telecom operators allows for immediate intervention, reducing the risk of successful scams. Advanced machine learning and analytics further refine Scam Signal’s detection capabilities, enabling it to learn from new scam tactics and recognize fraudulent patterns as they evolve.

Early pilot testing of Scam Signal has shown promising results. A three-month trial led by Vodafone and a major high street bank achieved a 30% improvement in scam detection. In another bank, Scam Signal was reported to reduce the number of scam incidents by 41%, lower fraud-related losses by 44%, and reduce false positives by 55%.

With full deployment now underway, Scam Signal aligns with new regulatory requirements set by the PSR. As of October 2024, banks are required to compensate fraud victims up to £85,000, underscoring the need for preventive measures like Scam Signal. By providing banks with early fraud warnings, the tool supports these new consumer protections and enhances trust in financial services.

Challenges and Future Outlook

While Scam Signal has achieved early success, the initiative faces several challenges. Ensuring that customer data is handled in compliance with data privacy laws, such as the UK GDPR, remains a priority. Additionally, standardizing API formats and network compatibility across telecoms and banks requires ongoing work, as does building mutual trust between these traditionally separate industries.

Scam Signal’s development and rollout indicate a trend toward real-time, data-driven fraud prevention models. The initiative joins global efforts to fight APP and similar fraud, including the STIR/SHAKEN protocols in the U.S., which combat caller ID spoofing, and Australia’s Scamwatch Program, which fosters industry collaboration to report scams.

By integrating advanced technology with cross-sector cooperation, Scam Signal is setting a new standard for combating APP fraud. As it continues to adapt to fraud schemes that cross banking and telecom boundaries, the initiative provides UK consumers with stronger protections and encourages global benchmarks for collaborative fraud prevention.