As the Traffic of Android Users in Mobile Banking Transaction is Quite High. Hackers have planted a New Malware named ‘EventBot’. This Malware having a high vulnerability especially to Mobile Banking and is capable of stealing not only Personal Information but also the Sensitive Data that users try to hide [...]
Digital fraud is the major problem that most businesses face since the advent of e-commerce in the 1990s, and its threat only increases with passing years without a downfall. In fact, Experts found that losses from fraudulent identities increased from 51% in 2017 to 57% in 2019. But according to PWC, these crimes have costed companies around $42 billion in the last 24 months. But why Digital Fraud is been evolving every year? From current trends and consumer natures to the latest technological enhancements and more sophisticated tactics,
Let’s see the top nine reasons digital fraud is rapidly increasing:
1. Chaos caused by the global COVID-19 crisis
Opportunistic hackers are taking advantage of the extreme global crisis that leads to even more fraudulent activity. Tactics include unemployment benefits, collecting payments for fake COVID-19 treatments, tricking People into donating to fraudulent charities, trusts. There were over 1.1 billion fraud attacks in the first half of 2020, which is exactly double the attack volume as compared to the second half of 2019. And according to the Federal Trade Commission, Americans have lost over $145 millions to fraud related to COVID-19.
2. A changing e-commerce landscape
Another trend impacting the rise in fraud is that all retail purchases are shifting online. In particular, card not present (CNP) transactions is been increased rapidly in recent years accounting total of 27% for all debit transactions in 2019, and is increasing at a rate of 10 times faster than card’s present transactions. More Commerce has moved Online as more consumers are staying home as a result of Covid-19. This trend makes it easier even for bad actors to make fraudulent activities. Point of sale (POS) lending has also become more common today, which allows customers to make payments in installments for large and small purchases. While it helps to make purchases in a matter of minutes, it also opens the door to fraudsters.
3. The advent of new marketplace platforms
From social media networks to dating apps to food delivery and alternative transportation, digital channels have revolutionized almost every industry. Throughout this year, country-wide quarantines have caused an even greater spike in mobile application usage, with consumers ordering everything from daily essentials to automobiles. Fraudsters have shifted their tactics to Online to take advantage of the Growing Numbers of Online Shopping.
4. Payments moving online
In addition to consumer transactions in online marketplaces, they are also using peer-to-peer payment and eWallet apps more often. These apps are getting more and more popular in Europe and Asia but are in demand in the U.S with 71% of Americans saying they have used a P2P payments platform. Users use these platforms to split their dinner money with friends, send money to family members in any part of the world, pay for services from a local vendor, and much more. With more than the P2P transactions taking place between the consumers and an unknown entity, the fraud risk is comparatively high.
5. Increasingly digital banking services
Today’s consumer’s transactions related to finance has increased a lot. As a result, legacy banks are going digital. Also in response to consumer demands, a replacement breed of “challenger banks” – born and doing business entirely within the online world – have emerged and are differentiating themselves by providing easy-to-use and digital-native experiences. A majority of those institutions’ customers are those that have “thin file” credit histories (i.e., don’t have much credit data). Less data means a greater risk of fraud.
6. New consumer expectations
Today’s consumers also want their data to be secured. Yet they’re going to abandon any transaction that takes too long, requires an excessive amount of data, or is just too complex. In fact, 92% of consumers want a fast, frictionless experience while also getting the transaction more secure as possible. These steep expectations are making banks and retailers to juggle preventing losses from keeping fraud prevention measures to preserve good customers relations. Cybercriminals understand the struggle these organizations face and cash in of these that fail to strike the proper balance of secure, yet frictionless customer experiences.
7. More sophisticated fraud tactics
Due to increasing cases of data breaches over recent years, fraudsters can more easily access Personally Identifiable Information and use it against consumers. For instance, fraudsters combine real and fake data (such as an address from one person mixed with another’s social security number) to create new, synthetic identities that are harder to detect. Then, they try to establish open bank accounts and cards, acting as a legitimate customer. Once they’ve established strong credit scores, the fraudsters invite higher credit limits or larger loans and easily stop paying. Synthetic identity fraud is damaging for consumers, but also expensive for lenders too, costing them $6 billion annually. Fraudsters also leverage PII for account takeover. By using passwords and credentials obtained via data breaches or social engineering, they can gain control over accounts and make fraudulent online purchases. These transactions can be as minor as buying groceries on a debit card or as severe as using someone else’s account to take out a mortgage. Account takeover fraud tends to be a serious threat for consumers that Juniper Research predicts will end in losses exceeding $200 billion between 2020 and 2024.
8. Unclear legal jurisdiction of cross-border fraud
Global commerce allows today’s online retailers and marketplaces to reach even more customers. Forrester estimates cross-border e-commerce sales will reach $627 billion in 2022, which would represent 20% of all e-commerce. However, cross-border transactions don’t come without some risk. Because they encompass multiple countries at a time, so it becomes much difficult for individual jurisdictions to properly monitor the fraud risk. Further, data privacy and protection regulations vary across regions — if they exist at all — making it even easier for fraudsters to commit cross-border transaction crimes.
9. Technological advancements
Due to the High Use of e-commerce, mobile payments, and computing power, fraud also has accelerated and grown even more sophisticated. Many of the technological advances are also being adopted by fraudsters to do frauds in various smartest ways. Criminals can more easily commit fraud using cheap, on-demand computes power or deploy algorithms using machine learning that is more subtle and capable of manipulating fraud detection systems. The traditional rules for fraud prevention systems are no longer being running now and the companies that relied on it are struggling now.
All these factors are leading to the rise of digital fraud. But by letting go of traditional rules-based risk assessment and instead of using machine learning-based approaches, you can better recognize and combat digital fraud. While large customer datasets overwhelm rules-based approaches, machine learning-based risk assessment can analyze global identity data and customer transaction patterns to determine whether a good customer or a fraudulent actor is behind the transaction. By looking closely at this data and how they are linked together, you can understand it leading to stop frauds while also providing your customers with a better experience.
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