Tackling Tariff Fraud: A Q&A with Feedzai’s Jas Anand

It’s hard to keep track of which tariffs are in place and which ones aren’t. Are tariffs on cars still in place? What about gas? Or medical supplies? It seems like every time you turn on the news, there are new ones. This constant confusion is a goldmine for scammers who are using tariff fraud to take advantage of people.

Ongoing uncertainty about the tariff situation gives scammers ammunition to commit financial crimes.. In this Q&A session, Feedzai’s Jas Anand breaks down the state of tariff fraud and what banks can do to protect their customers amid a flood of confusion and misinformation. 

What is Tariff Fraud and Why is it Increasing Now?

Tariff fraud is when scammers take advantage of the confusion around changing tariffs regulations to trick people and businesses. Criminals target both small businesses and individuals using tariff fraud. Both groups can get confused which tariffs are in effect, giving criminals ample opportunity for exploitation.

Here’s the thing: tariff fraud isn’t new, but what’s happening now is that criminals are jumping on the tariff bandwagon. Since tariffs are in the news all the time, it creates more confusion and panic, which makes these scams even more effective.

What’s different now is how criminals are exploiting the recent changes and news surrounding tariffs. Anything that hits the news cycle for a significant period, like tariffs have, criminals will take advantage of and target. While the tactic isn’t new,  the volume and the panic surrounding the topic are different because it’s in the news so much.

How is Tariff Fraud Typically Carried Out?

Tariff fraud is similar to other scams where criminals pretend to be someone else. They use the usual tricks like phishing emails, texts, and phone calls. The only difference is that they’re using tariffs as the hook.

Here’s how these scams usually work: The scammers pretend to be someone important, like a border security officer or a trade consultant. They’ll send you a text or email designed to make you panic and rush to pay fake fees or give away your personal information. They’ll often mention ‘enforcement of tariffs’ to make it sound urgent.

Their goal is usually to either steal money directly by getting you to pay fake tariffs or to steal your personal or business information for identity theft.

How do Fraudsters Target Businesses Using Tariff Fraud?

Let’s say you’re a Canadian furniture company that ships products to the US. Now, you’re dealing with new tariffs. A scammer might reach out, maybe by email or phone, and offer a ‘tariff protection package’ that sounds great but requires you to pay upfront.

A more damaging scenario involves data theft. The scammer might claim they need to collect a lot of the business’s information to “help” with tariffs. Using this stolen information, they could then go to a different bank where the business does not have an account and open a new account in the business’s name. 

If scammers steal business information to open accounts or get lines of credit, it could severely damage the business’s credit rating, credit bureau standing, ability to borrow funds in the future, and even threaten their existing banking relationships. This is the identity theft version of the scam, where criminals want the business’s creditworthiness, not direct payment from them.

One concern is whether businesses, especially those that might really be involved in illegal practices like undervaluing imports, might be too afraid to report these scams. If a scammer offers to help them dodge tariffs, they might be too scared to come forward because they don’t want to get in trouble themselves.

Why is it Difficult to Verify Communications from Government Agencies? Does this Help Tariff Fraud?

One of the main reasons tariff scams are so successful is that it’s hard for people to verify who’s really contacting them from a government agency.

Imagine a scammer pretending to be someone important, like a tax officer or a customs agent. It’s often really difficult to confirm if that person actually works for the agency as they claim. You might not even know who to call, and there’s usually no easy way to check if there’s a real investigation or claim against you.

For example, in Canada, the Canada Revenue Agency (CRA) often communicates by mail or secure email with an inbox that says ‘do not reply.’ This makes it super hard to get information or talk to someone who can confirm if a message is real. Scammers exploit these communication problems, making it easy to pretend to be these agencies.

How is Tariff Fraud Opportunistic? How is it Organized?

As we’re seeing it, tariff fraud is taking both organized and opportunistic paths. 

It’s opportunistic because scammers send out massive amounts of tariff-related messages, hoping that even a small number of people will respond to them. Even if only a few people take the bait, the scammers can still make a lot of money.

We’re also seeing organized attacks in which criminals use deepfakes or voice cloning to misrepresent authorities to steal sensitive information or large value payments. Criminals may use advanced technology like GenAI to create realistic-looking government documents and spoof phone numbers that look like they come from collection agencies or government agencies. 

What Can Banks Do to Help Combat Tariff Fraud?

Unfortunately, tariff fraud is probably going to stick around as long as there’s confusion and tension around trade. But the good news is that banks can do a lot to protect their customers.

Education and Awareness Campaigns

Banks can help by educating people about common scam tactics, like pretending to be someone else or creating a false sense of urgency. Giving customers reliable information on how to spot and avoid scams is key.

Monitoring Unusual Payments

Banks can identify payments that are unusual for a business or individual. While they may not know the cause or purpose of the payment, they can flag it and contact the customer to verify the authenticity of the request and payment.

Verifying New Account Openings and Credit Applications 

When banks open new accounts, they should double-check the customer’s identity and the information they provide. This helps prevent scammers from using stolen information to open fake accounts or get credit in a business’s name. Banks should also monitor accounts for suspicious activity and confirm anything unusual with their customers.

Embrace Federated Learning at Account Opening

If scammers steal a business’s information, they could open a fake account and max out their credit line. This hurts both the business and the bank when the scammers disappear without paying back what they owe. Using strong data practices, like federated learning, when opening new accounts can help catch this type of fraud early on.

Monitoring Inbound Payments

Scam proceeds usually wind up in money mule accounts. Monitor inbound payments into your bank to ensure they are not proceeds of crime or theft. 

Using Advanced Technology

New technology powered by GenAI can quickly analyze messages (from messenger, chat, email, or text) and spot suspicious signs. Banks can use this technology to catch red flags like fake email addresses, typos, and other clues that a message might be a scam, even if it’s about tariffs.

Key Takeaways

The basic scam tactics—phishing, pretending to be someone else, creating a sense of urgency—are still the same, but tariffs are a hot topic right now, which makes these scams even more effective.

As long as tariffs keep changing, there will be confusion, and scammers will keep trying to take advantage of businesses and individuals. It’s important to stay informed and teach your customers how to recognize and avoid these scams.

• Blog: AI-Driven Fraud: How Criminals Are Using AI to Scam You
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• Solution: RiskOps. Unify All Risk Signals to Stop FinCrime.