What is the true impact of global rising fraud?

1. How would you sum up the latest status of fraud globally?

Fraud is on the rise. And this trend isn’t going to go away any time soon. We’ve seen a continuous uptick year on year and the pressure is on for businesses globally to detect and prevent the ever changing and increasingly sophisticated fraud attempts.  

As experts in the art of manipulation, fraudsters have, and will, always look for weaknesses in both individuals’ or organisations’ behaviour that they can exploit to their advantage. Whether it’s using genuine data obtained through data breaches, harvesting personal information through coercion, or by creating synthetic identities, the end result is the same: a victim of fraud that has suffered some level of loss.

What’s more, globally, the cost of living is increasing and the disparity between income and expenditure is widening. This financial pressure is increasing the number of individuals who are driven to fraud by necessity rather than to fund a lavish lifestyle. For many, it will be opportunistic rather than proactive, taking advantage when the opportunity presents itself rather than actively seeking ways to defraud organisations.

Money mules are probably the best example of this and continue to be a big problem. In many cases, although they are committing fraud, money mules are as much a victim as the owner of the account from which funds are taken. The younger and older generations are targeted the most actively, as fraudsters seek to take advantage of those that are vulnerable and under severe financial pressure.

2. What’s the biggest fraud challenge facing businesses today?

It varies sector to sector but many of the usual suspects span industries:

• ID related fraud and more specifically Synthetic ID fraud. 68% of businesses report the same or increased amount of synthetic identity fraud in the last year (link to State of DI)
• Money mules in connection with unauthorised transactions on victims’ accounts
• No intent (or ability) to pay at the point of taking on new borrowing

In addition to these, the emerging and ever-increasing threat associated with AI-driven deepfakes is something that is becoming more concerning.

3. What’s your predictions moving forward?

Social engineering will continue to be a favoured M.O. of many fraudsters, as in many cases it allows a fraudster to circumvent a lot of the anti-fraud processes organisations have put in place. For example, a One Time Passcode can be useless if the owner then passes it on to a fraudster, convinced they work for their bank or are a trusted person.

Mass cyber-attacks and the targeting of organisations to obtain the personal information of their customers in bulk will continue and fraudsters will carry on trying to monetise it by selling it on the dark web. Those using such information to make false applications or to attempt to take over existing accounts will maximise the use of this information.

First party fraud is likely to increase if the economic crisis worsens and more people struggle to stay afloat.

Artificial Intelligence will increasingly be leveraged by fraudsters to strengthen their fraudulent attempts as they are not limited by regulation or compliance requirements.

4. So, what can companies do to tackle fraud head on and ensure business growth?

1. Review fraud defences: Make sure that your fraud defences are as robust as they can be to keep the fraudsters out. Most fraudsters are lazy - they will keep doing what they are doing until they start to be stopped. In most cases, rather than try to circumvent your upgraded process, they will move their attention elsewhere to another company that is less well protected.
2. Create a fraud strategy: Your fraud detection processes should not introduce unnecessary friction to your genuine customers, so a fraud strategy needs to strike the balance between friction and fraud detection. Non-intrusive or passive checks can be valuable to help achieve this goal and there are many electronic checks that can be undertaken that are invisible to your applicant, such as:

• • Checks on Email Addresses and Mobile Phone numbers can help, as many fraudsters will not use their victims’ genuine details to prevent them from being contacted.
  • Access to a data consortium during the onboarding process, will allow you to see signs of suspicious behaviour before a fraudulent application becomes a fraudulent customer.

In addition to this, you can reduce your customers’ potential exposure to social engineering by moving away from One Time Passcodes sent to mobile phones and instead use more passive authentication techniques that do not involve passcodes that can easily be shared.

If you have any questions or would like to arrange a call to discuss anything mentioned in this exclusive Q+A, then please get in touch, we’d love to hear from you: kelly.carey@gbg.com