I’ve been an HSBC customer for roughly two years and have complained about these practices probably more than a dozen times without any real acknowledgement or change.
HSBC, like most banks in the UK, provides every customer a 2 factor security token to make sure that logging in requires something you know (your password) and something you have (your token’s time-limited code). So far so good. They even have a signing procedure for sending money (personal accounts only, strangely) that requires you to hash the transaction amount with your token, and put in the corresponding code as part of the transaction. A nice touch.
A Horrible Anti-Fraud Algorithm
Where HSBC has a glaring security hole is their fraud detection and prevention. As near as I can tell, the HSBC fraud algorithm is essentially “IF online transaction AND/OR foreign origination AND/OR amount is greater than [some nominal amount] THEN fraud”.
There’s no history taken into account, and they routinely ignore travel advisories called in ahead of time. So for example, if you signup to a monthly recurring charge for a software service outside of the UK (many of them) it doesn’t matter that the charge has occurred every month for a year, they’ll still pop an alert. This is particularly problematic for subscriptions billed annually, as it seems that their fraud team can perform a manual override on most things, but not on infrequent subscriptions.
An Outsourced Anti-Fraud Team
Foreign can often mean “somewhat far away” too. There’s no concept of accepting a card present, pin verified transaction as maybe worth the benefit of the doubt either, so I’ve had my card declined for sandwich shop purchases in towns less than fifty miles away from my home address.
A Dangerous Fraud Verification Process
But all of this could maybe be lived with, if not for the horrific fraud verification procedures employed by one of the largest banks in the world.
Here’s how it works:
- Their horrible fraud algorithm pops an alert. This can occur on a subscription charge, a pin verified card present charge, or a verified by visa online charge.
- You will receive a phone call from an unknown number (blocked).
- An Indian call centre rep will tell you they’re calling from HSBC and they’ll need to verify some important information before they speak to you. So far, this has been my birth date or post code (enough to get your full address in the UK). If you refuse to speak to them, your card is blocked. If you call them back, it will take roughly 25 minutes on hold being transferred around to clear the block.
- If you don’t answer the phone, they will leave a voicemail. Again, an Indian call centre rep will preface the voicemail with an urgent request for contact, then they will play a recorded message. Often there will be a problem here, and they’ll have to call back to get the recording playing right.
It’s important to note that the phone connection quality is invariably terrible. This means you can’t understand the person, and the recording is garbled as well. I also don’t care if the representative is a native English speaker or not. I do care that the cut-rate policies of HSBC mean they have chosen an outsourcing provider who can’t seem to get decent phone service, thus making the entire thing more vulnerable to phishing (it’s easy and cheap to sound just like HSBC or even worse, do a better job by having a nice fluent British accent via a clear connection).
An Active Phishing Threat?
For the past two years I’ve been uncomfortable with this process. It leaves you open to phishing attacks, particularly spear fishing. It relies on data that could be publicly obtained fairly easily (birthdate and post code) and even if you can’t get this data, you can easily phish it by impersonating a representative then using that information to escalate privilege elsewhere.
A better solution would be to mimic the procedures in place at other banks. Chase for example has an app that will securely message you the details of a questionable transaction which you can approve or deny in a few seconds. They’ll also SMS you the details of the charge, which you can respond to. Lastly, if you don’t have a smart phone or can’t receive text messages, they’ll call you and use a challenge response procedure to verify yourself, or leave you a voicemail instructing you to call the number on the back of the card. The entire process is safe, easy, and quick not matter what mechanism you use (I use all three depending on the situation).
It appears that these weaknesses in HSBC’s procedures have now caught the attention of others. A couple of days ago I was called by someone who mumbled around that they were from HSBC, and asked me for information. I declined, like normal. I called the bank back like normal. Except this time, nobody from HSBC had called and no suspicious charges were flagged. Apparently someone had attempted to phish me! I wonder how long it will take HSBC to address this now that their customers are being actively targeted?
Lets review how we got here:
- A poor anti-fraud algorithm means false positives are common.
- A lot of alerts means you need a large customer service staff.
- You outsource this, you don’t automate it, and put in place procedures that are fraught with security problems.
- Your frustrated and desensitised customers lose respect for the process.
- Phishers take note, and begin to capitalise.
HSBC Customers, Be Careful!
Be careful out there! Never give any personal information to anyone calling you, no matter who they claim to be and no matter how annoying the procedure is.