Fraud Trends and Predictions in 2023
In the second quarter of 2023, fraudulent activities has evolved into different levels across the globe. Global banks are facing increasing scrutiny over the dividend tax fraud scheme, as investigations has recently been conducted in several European countries, including Germany and France. This means that no matter how much time passes, fraudulent activities will continue to change shape. For this reason, taking a look at the fraud trends that we may encounter during these periods that will be the shining star of this year will help many people in this sector to continue on their way unscathed.
Fraud Trends To Look Up For
With the increasing use of artificial intelligence and machine learning in various industries, there is an increase in fraud related to these technologies. This includes fraudulent use of AI-generated content, deep fraud, and other forms of manipulation that leverage the power of AI. Also recently, Joseph Cox shared a video on social media. In the video, we saw that it is possible to hack into any individual's bank account using an artificial intelligence copy of their voice. Artificial intelligence allows the bank to access information such as account balance and transaction history by convincing the bank that the individual is communicating with them, and when AI is used in such purposes, it leaves no room for movement especially the finance industry.
Deepfake scams have increased significantly especially in positions that work remotely. Scammers use images and videos imitating the individual who they want to get their login credentials. After getting the necessary information by tricking the system, the hackers could do whatever they want with the hacked account. They can empty it or use as an anchor for fraudulent transactions. The FBI recently released a Public Service Announcement (PSA) warning employers and job seekers of the growing threat of deep fraud in the hiring process.
In the digital era, where an increasing amount of financial and personal information is being stored online, providing cybersecurity is getting harder and harder. Cybercriminals adopt a variety of strategies to trick their victims, including creating websites or emails that seem to be from reliable sources or utilizing malware to access confidential data.
The most common type of cyber fraud is still phishing. Phishing attacks are one of the most preferred methods of hackers because these attacks are cheap, effective, and easy, especially with the increase of machine learning, they can organize these attacks in an automated manner. The attack usually starts via emails, and text messages and continues with the use of a fake website or a realistic online platform.
The attacker frequently pretends as a reliable source, like a financial institution, social media platform, or e-commerce site, and leverages urgency or panic to persuade the victim to give personal information. A phishing email, for instance, can incorrectly state that the victim's account has been compromised and ask individuals to enter their login information on a fake website.
Attacks using software known as ransomware encrypt the data of the victim and demand money to unlock and decrypt the information.
An attacker infects the victim's device, which could be any endpoint, including a computer, smartphone, or other devices, by exploiting flaws in human behavior, computer systems, networks, and software.
After gaining access to the targeted device, the attacker encrypts the files and requests a ransom to decrypt them and allow access again. These cyberattacks can be extremely damaging, resulting in major data loss, unavailability, and reputational harm. Ransomware attacks affected 76% of firms in 2022, significantly more than any other type of attack. 64% of them were successfully infected with ransomware. Some of the well-known ransomware programs are Wannacry, Cerber, Locky, and Ryuk.
Supply Chain Attacks
A method of cyberattack that exploits weaknesses in the transmission chain to gain unauthorized access to a company's systems and networks. The attacker is protecting this by compromising the software, hardware, or other damage of a third-party vendor or vendor the target expectation trusts. After infiltrating the vendor's systems, attackers can gain access to the target's network or bugs, often undetected by traditional security measures. In coming years, it is forecasted that nearly half of the worldwide companies will be affected somehow.
Investment fraud aims to deceive investors into thinking they will receive a good return on their investment while actually stealing their deposit money or using it for the scammer's own gain.
Ponzi schemes, pyramid schemes, pump-and-dump schemes, and high-listing sales techniques are only a few examples of the trending investment frauds in the financial services industry. Most recently, fake initial coin offerings (ICOs) have deceived numerous investors in the cryptocurrency industry . To win the faith of potential clients, fraudsters utilize deceptive or false claims, false qualifications or references, and other strategies. After persuading those who are interested in investing, the fraudster either disappears with the money or uses it to fund personal expenses.
Investment fraud is not just a problem for individuals or small enterprises where this sort of fraud action can also target large organizations, with some high-profile cases resulting in losses of millions or even billions of dollars in the financial services industry. Furthermore, investment fraud has increased in frequency over the past several years due to technological advancements and the growing popularity of online investment platforms.
We can reach everything in seconds and buy whatever we want in seconds, and obviously, people participate in e-commerce to some extent, either through providing e-commerce services or by acting as consumers and purchasing goods.Thus, the probability of being negatively affected by this scheme is getting higher and higher. These days e-commerce fraud pays the attention of everyone since its prevention requires a sophisticated fraud detection system. Here are some of the current e-commerce fraud trends that make people or businesses difficult to handle:
Card Testing Fraud
In such attacks like this, fraudsters have the stolen credentials of a card but before making any large-scale fraud, they want to be sure the card seized is still valid and has enough limit to purchase the items. To verify, they first start making small charges, and usually, businesses do not notice these little ones. When attackers are done with card testing, they initiate their plan by making huge purchases, and in the worst-case scenario, the stolen card information is sold on the black market to other criminals.
Without fraud prevention systems and techniques like Formica, it is really tedious and difficult to detect credit card frauds. Card testing fraud may especially cause considerable losses for businesses where tracking transactions are complicated.
Account Takeover (ATO) Fraud
Account takeover fraud is a well-known type of identity theft in which the fraudster has gained someone’s account and utilized it in his illegal activities. Fraudsters could obtain the user’s login information through phishing scams, malware attacks, or the dark web. Once they gain authority in the customer's account, scammers can access other accounts of him, change the login password, make transactions, or even steal the individual’s identity.
Account takeover fraud makes people vulnerable due to it can be committed on various kinds of accounts, such as bank accounts, social media accounts, e-commerce accounts, etc. E-commerce accounts are the most common target of account takeover (ATO) fraud due to their potential to generate fast profits for cybercriminals. Although ATOs can impact various types of accounts, e-commerce accounts offer an appetizing opportunity for fraudsters to make money quickly.
Triangulation fraud consists of 3 key players: A seller who is unaware of, an individual intends to shop, and the fraudster. The fraudster approaches the real seller pretending to be a buyer looking for a good or service. With the seller's approval of the deal, the scammer approaches the victim while passing himself off as the seller and presents the same good or service at a cheaper cost. These competitive prices attracts considerable amount of the customers and without noticing they become victims.
That’s how it continues: the customer suppose that they are jus making a normal purchase as always but after entering the credit-card information and other login credentials, the fraudster gain the access of purchasing from the actual seller by utilizing the victim’s credentials. The price difference between what the scammers pays to a legitimate vendor and what they charge the victim is how they makes money. The victim is left having nothing in hand, and the honest seller might also lose money.
Formica is here to eliminate fraud!
As we move into the future, fraudsters will continue to adapt and evolve their tactics in order to stay ahead of detection and prevention measures. However, with the use of advanced technology and artificial intelligence, companies like Formica AI are well equipped to stay ahead of the curve and mitigate these risks.
One of the key takeaways from our discussion of 2023 fraud trends is the importance of adopting a multi-layered approach to risk management. This involves not only utilizing the latest technology and tools, but also prioritizing employee training and awareness, as well as implementing strong policies and procedures.
Another trend that we can expect to see in 2023 is an increased focus on collaboration and information sharing among industry stakeholders. This will help to facilitate more effective and efficient detection and prevention of fraud across different sectors.
Ultimately, as we look ahead to the future of fraud prevention, it's clear that there are significant challenges to overcome. However, by staying informed and proactive, companies like Formica AI can help to keep themselves and their clients protected against these evolving threats.