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Ellen Bagley was delighted when she made her first sale on a popular second-hand clothing app, but just a few minutes later, the thrill turned to shock as the 20-year-old from Link\u00f6ping in Sweden discovered she\u2019d been robbed.\u00a0<\/p>\n
Everything seemed normal when Bagley received a direct message on the platform, which asked her to verify personal details to complete the deal. She clicked the link, which fired up BankID \u2014 the ubiquitous digital authorization system used by nearly all Swedish\u00a0adults.\u00a0<\/p>\n
After receiving a couple of error messages, she started thinking something was wrong, but it was already too late. Over 10,000 Swedish kronor ($1,000) had been siphoned from her account and the thieves disappeared into the digital shadows.<\/p>\n
\u201cThe fraudsters are so skilled at making things look legitimate,\u201d said Bagley, who was born after BankID was created. \u201cIt\u2019s not easy\u201d to identify scams.<\/p>\n
Although financial crime has garnered fewer headlines than a surge in gang-related gun violence, it\u2019s become a growing risk for the country. Beyond its borders, Sweden is an important test case on fighting cashless crime\u00a0because it\u2019s gone further on ditching paper money than almost any other country in Europe.\u00a0<\/p>\n
Online fraud and digital crime in Sweden have surged, with criminals taking 1.2 billion\u00a0kronor<\/a>\u00a0in 2023 through scams like the one Bagley fell for, doubling from 2021. Law-enforcement agencies estimate that the size of Sweden\u2019s criminal economy could amount to as high as 2.5% of the country\u2019s gross domestic product.<\/p>\n To counter the digital crime spree, Swedish authorities have put pressure on banks to tighten security measures and make it harder on tech-savvy criminals, but it\u2019s a delicate balancing act. Going too far could slow down the economy, while doing too little erodes trust and damages legitimate businesses in the process.\u00a0<\/p>\n Using complex webs of fake companies and forging documents to gain access to Sweden\u2019s welfare system, sophisticated fraudsters have made Sweden a \u201cSilicon Valley for criminal entrepreneurship,\u201d said Daniel Larson, a senior economic crime prosecutor.<\/p>\n While the shock of armed violence has grabbed public attention \u2014 the nation\u2019s gun-homicide rate tripled between 2012 and 2022 \u2014 economic crime underlies gang activity and needs to be tackled as aggressively, he added.<\/p>\n \u201cThat has been a strategic mistake,\u201d Larson said. \u201cThis profit-generating crime is what\u2019s fueling organized crime and, in some cases, leads to these conflicts.\u201d<\/p>\n Sweden\u2019s switch to electronic cash started after a surge of armed robberies in the 1990s, and by 2022, only 8% of Swedes said they had used cash for their latest purchase, according to a central bank survey. Along with neighboring Norway, Sweden has Europe\u2019s lowest number of ATMs per capita, according to the IMF.<\/p>\n The prevalence of BankID play a role in Sweden\u2019s vulnerability. The system works like an online signature. If used, it\u2019s considered a done deal and the transaction gets executed immediately. It was designed by Sweden\u2019s banks to make electronic payments even quicker and easier than handing over a stack of bills.\u00a0<\/p>\n Since it\u2019s original rollout in 2001, it\u2019s become part of the everyday Swedish life. On average, the service \u2014 which requires a six-digit code, a fingerprint or a face scan for authentication \u2014 is used more than twice a day by every adult Swede and is involved in everything from filing tax returns to paying for bus tickets.\u00a0<\/p>\n Originally intended as a product by banks for their customers, its use exploded in 2005 after Sweden\u2019s tax agency adopted the technology as an identification for tax returns, giving it the government\u2019s official seal of approval. The launch of BankID on mobile phones in 2010 increased usage even further, along with public perception that associated cash with criminality.\u00a0<\/p>\n The country\u2019s central bank has acknowledged that some of those connotations may have gone too far. \u201cWe have to be very clear that there are still honest people using cash,\u201d Riksbank Governor Erik Thedeen told Bloomberg.<\/p>\n BankID is controlled by a consortium of the country\u2019s private lenders, including Swedbank AB, SEB AB and Svenska Handelsbanken AB. A number of changes have been implemented to improve its security, as the government investigates the prospects of offering a state-issued digital ID.<\/p>\n \u201cThere is dedicated work going on throughout the banking sector to stop the fraudsters, but the police, the political side and the telecom industry need to do their part,\u201d said Bj\u00f6rn Johansson, Swedbank\u2019s head of group fraud prevention. Representatives for SEB and Handelsbanken declined to comment.<\/p>\n For Bagley, the fact that BankID is so commonplace is part of the problem. \u201cIt ends up not really being a security measure, but just another step in using a website,\u201d she said. \u201cYou don\u2019t really think twice about what the BankID app might say you are logging into.\u201d<\/p>\n It\u2019s not just consumer scams. Government agencies have adopted BankID to make it easy to set up legitimate businesses in Sweden, which\u00a0has also enabled fraudsters. Some have used fake companies with phony payrolls to launder money. Through such schemes, organized criminals can turn income from fraud and drug sales into a tool to get bank loans and extract payments from the welfare system.<\/p>\n \u201cThat means you can generate profits from crime and then ultimately get a state pension based on that income,\u201d said Larson, the Swedish prosecutor. \u201cThat is extremely offensive.\u201d<\/p>\n Reported cases of benefit fraud have doubled in the last decade, from just under 9,000 in 2014 to over 23,000 in 2023,\u00a0according<\/a>\u00a0to the Swedish National Council for Crime Prevention. In its efforts to clamp down on crime, the government created a\u00a0new agency<\/a>\u00a0this year solely focused on tracking erroneous welfare payments.\u00a0<\/p>\n As the scale of the problems grow, banks are introducing measures that will allow additional layers of security, including requiring approval from a trusted second party for large transfers. But for the most part, they\u2019re voluntary, with users needing to opt in to set up two-stage authorization or delay payments.<\/p>\n \u201cIt\u2019s a constant quest to find the right balance between accessibility and security,\u201d said Peter G\u00f6ransson, a senior security adviser at the Swedish Bankers\u2019 Association. \u201cThere will be situations where transfers will be slower \u2014 and that is already happening \u2014 but that\u2019s the world we live in and I think there is an understanding among customers for that.\u201d<\/p>\n The development has led to calls for banks to bear a bigger share of the burden when their customers are exposed to fraud. In the second half of 2023, payment service providers only footed about 10% of the bill, and the country\u2019s financial watchdog has said that Sweden might do well to follow an example from the UK, which from October will require banks to reimburse customers who have been conned into making transfers.<\/p>\n Until similar regulation is adopted in Sweden, the chances of getting money back for users like Bagley are slim. She reported the February incident to Sweden\u2019s National Board for Consumer Disputes and has tried to raise awareness through social media, overcoming the feeling of embarrassment for being duped.\u00a0<\/em><\/p>\n \u201cI\u2019ve heard from so many others who have told me \u2018I\u2019ve also been scammed and felt so alone and ashamed\u2019,\u201d she said.<\/p>\n<\/div>\n