How to protect your business from online fraud
COVID-19 has created a watershed in the digital switchover, triggering a wave of online fraud in the process.
Direct messages are accessible and passwords changed, with critical infrastructure in play. Through social engineering, authors exploit human weakness and vulnerabilities. It raises a troubling perspective: as the world becomes more and more digital, what does this mean for security?
Leveraging a rich data set, this infographic from Equifax discovers several new trends in digital fraud and shows how businesses can prevent online scams without affecting the user experience.
Understand how online fraud affects you
Here are some of the trends impacting lenders, service providers, and the US government.
Credit card fraud is not a new phenomenon. The COVID-19 era, however, has accelerated it for businesses and consumers. Credit card fraud on new accounts has increased 88% since 2018, affecting approximately 250,000 people in the United States. This is where crooks use a stolen synthetic identity to open a new account and maximize credit limits.
Meanwhile, consumers are turning to e-commerce experiences more than ever to purchase essentials, entertainment, and more. It means shopping with new suppliers and making more purchases without a card.
With an increase in transactions comes an increase in chargebacks, whether it’s friendly frauds or legitimate disputes. This is something that has not gone unnoticed: in fact, 40% of companies have noticed a increase in chargebacks since January 2020.
Number of victims
Globally, the number of fraud victims has jumped 20% according to reported alerts to victims of fraud. In 2019, the most reported fraud alerts affected people aged 60 to 69, with an average loss of $ 600.
|Age||Percentage of losses||Median loss||Total losses|
|19 and under||3%||$ 200||$ 14 million|
|20-29||13%||$ 448||$ 124 million|
|30-39||16%||$ 379||$ 168 million|
|40-49||15%||$ 410||$ 178 million|
|50-59||16%||$ 500||$ 186 million|
|60-69||20%||$ 600||$ 223 million|
|70-79||12%||$ 800||$ 150 million|
|80 years and over||5%||$ 1,600||$ 72 million|
|Total (all age groups combined)||100%||$ 448||$ 1,115 million|
* Based on 1,697,934 fraud reports in 2019, of which 51% include information on age
Source: Federal Trade Commission (January 2020)
Now, fraudsters use phishing schemes and COVID-19 scams by creating fake websites with false COVID-19 information.
Synthetic identity risk
Often used in credit card fraud, synthetic identity theft occurs when criminals construct a false identity, based on both real and false information, to make fraudulent purchases. Synthetic identity fraud can include piggybacking an account, setting up a bogus business, or working with corrupt merchants. Scams that manipulate people with good credit have multiplied 36% since 2018.
Authorized User Abuse
As the pandemic unfolded, abuse by authorized users increased by more than 20%.
Abuse of authorized users occurs when owners of low-risk primary cards “lease” their business lines with extensive credit histories, high credit limits, and strong repayment profiles to others, often with knowledge. of cause, to fraudsters.
So how can businesses protect themselves against these increasingly sophisticated tactics?
Navigate to the right balance
Fraud prevention is simple: stop accepting transactions or authorizing the creation of new accounts. But, it stifles business growth. More friction is not the answer either. Businesses need to find the balance between a smooth experience and fraud prevention.
To improve the online security of any business, it is important to understand the journey of the consumer lifecycle. Typically, hot spots throughout this cycle fall into two camps: customer experience or security protections.
|Client experience||Provide an optimal experience||
|Login or authentication||
Hence, these can improve the monetization value of businesses and help net profit.
Identifying these specific layered solutions can be the difference between winning a new customer or not, without sacrificing your security.
Online fraud: what happens next?
Yet finding the right balance between customer experience and security can be difficult.
But when these solutions are implemented, a 73% A decrease in fraud reporting incidents is reported by some users. At the same time, a double-digit increase in credit approvals is taking place, while the overhead costs associated with costly review of applications decrease. 30%.
To mitigate threats and avoid consumer bottlenecks, companies can apply solutions such as:
- Account verification
- Digital identity trust
- Verification of documents
- Multifactor authentication
Additionally, businesses can seek to establish the level of trust or risk with every interaction throughout the customer journey, from account creation, and connection to the payment transaction.
High-trust interactions can evolve into a seamless VIP experience, while riskier interactions can be dynamically challenged with friction. A vast network of identity trust combined with adaptive AI helps businesses make the right decisions with every interaction. This protects both the business and the customer experience.
Combined, they provide the early warning technology that thwarts online fraud and digital attacks, with lasting implications for businesses in the world. COVID-19[female[feminine digital age.