Fraudsters don't stand still. Neither should you.
It’s a relatively well-known fact that companies must evolve to meet customer demands. In parallel, fraudsters evolve too, continually adapting to new situations and technologies to steal from consumers and businesses.
Take the coronavirus pandemic as a very recent example, with the Federal Trade Commission reporting that, as of June 3, Americans have lost $45.32 million to coronavirus-related fraud.
While it’s inevitable that fraudsters will continue to hone and change their methods, businesses must continually monitor the factors that affect fraud — from changing consumer behaviors to major economic trends — and the actions they can take to safeguard against them.
If we look at today’s climate, with the global pandemic resulting in shelter-in-place orders across the U.S., we’re seeing a surge in online spending — with consumers flocking toward essential items like groceries and toilet paper and streaming entertainment services. As a result, an unprecedented number of companies have either partially or completely moved their operations online to survive amid the lockdown.
This mandatory shift exposes new fraud threats as many companies are forced to make the online transition quickly. Discount stores, off-price department stores and independent small businesses may be unfamiliar with online fraud and will therefore be attractive targets for seasoned fraudsters. And yet, merchants may not realize that they have a fraud problem until at least some damage has already been done.
Additionally, with unemployment rates at a near-all-time high, we’re likely to see a surge in attempted fraud by a whole new crop of individuals looking to cut corners. As many consumers feel financial stress from the pandemic, they may resort to “friendly fraud,” where someone uses their own credit card to buy something, receives the item and requests a refund anyway. Since signatures are no longer required in many cases in order to maintain social distancing orders, buyers can easily claim they did not receive the item and request a refund, leaving merchants with no ability to confirm whether or not the item was in fact received.
But studying economic trends are only one part of understanding fraud patterns.
As highly anticipated technologies such as IoT and 5G become more mainstream, it’s important to understand where inherent weaknesses exist.
5G offers broader internet penetration, access and expanded transaction potential — however, these same benefits also allow for more bad behavior. This is especially important for e-commerce as 5G supports faster mobile speeds. Our recent data shows that payment fraud is increasingly committed on mobile, with more than half (51%) of the payment fraud attempted in the last year committed via mobile devices.
Likewise, the proliferation of IoT provides an unprecedented amount of computational power that fraudsters can exploit and utilize. As more connected devices come online, these devices are increasingly targets for fraudsters.
Often these devices are connecting to the internet before 5G access increases availability to more locations and devices. The increased online presence and activity leaves a lot of “greenfields” for fraudsters to attack.