A growing wave of low-value fraud on social media is emerging as a serious concern for banks in the United Arab Emirates, even as financial institutions invest heavily in advanced security systems.

A recent survey commissioned by BioCatch found that 95 percent of UAE banks view so-called ‘micro-scams’ as an increasing challenge for both detection and reporting. These scams typically involve small amounts, making them appear less threatening and more likely to bypass customer suspicion.

Why are Micro-Scams Harder to Detect?

While big scams depend on the amount, micro scams depend on numbers. Fraudsters approach people individually for small amounts using social media channels, where it is easier to manipulate their trust.

Banks found expats to be more vulnerable because they lack a significant history of conducting business within the country's banks. The fast-paced real-time payments system has also made it hard for financial institutions to detect fraud.

Thomas Peacock, the Director of Global Fraud Intelligence at BioCatch, pointed out that although banks in the UAE lead in adopting technologies such as machine learning and behavioral biometrics, changes in payment systems are creating opportunities for fraudsters.

Losses Rise, but Confidence Holds

It was found that 62 percent of participants estimated annual fraud losses at around Dh18.3 million, with 58 percent noting an increase in total fraud losses over time.

Nevertheless, a positive attitude towards their efficiency still prevails. 83 percent of UAE banks stated that their current mechanisms were either effective or very effective, outperforming the global average. In addition, about 77 percent are seeking new tools to improve fraud-prevention capabilities.

The investigation rate is also higher among UAE banks. 41 percent mentioned the possibility of detecting the main source of the problem on the same day, higher than the global average of 26 percent.

Gap in Reimbursement and Risks Associated with Reputations

Another problem worth mentioning is reimbursement. 26 percent of the respondents said that the number of compensated clients exceeded half of all scam victims. The result is worse than that of other countries' banks.

Finally, it appears that reputational risks are still perceived as more dangerous for businesses than financial ones. Approximately three-fourths of all banking officials consider it the main risk.

In addition, 76 percent of the surveyed institutions have already adopted or evaluated behavior-based techniques.