A new year represents new prospects and a chance to start over for the majority of people. For fraudsters it appears like everything old is new again in 2022, including get-rich-quick schemes, crypto scams, romance frauds, and more. But, one thing fraudsters will do this year is pay more attention to the lives of their victims. Continue reading to discover about the fraud trends to look out for in 2022:
The use of social engineering to commit ATO and APP fraud is on the rise
Fraudsters can hijack a legitimate user’s account using personal credentials obtained via the dark web, phishing (or even social media). If fraudsters are unable to gain access to a customer’s account, they may resort to social engineering to deceive victims utilizing authorized push payment (APP) methods.
Fraudsters research victims before posing as vendors
Fraudsters are adapting their schemes away from quick “smash and grab” attempts to stalking their victim’s online transactions. Conducting layered research enables social engineering fraud or the use of personal information obtained from phishing or malware attacks. When a fraudster accesses a victim’s bank account they can learn important details about their life. Some fraudsters will craft a portfolio of narratives for a wide range of scenarios.
Real-time B2B payments expose businesses to fraud risks
Businesses worldwide should prepare for how the enhanced speed of payments leaves them vulnerable to fraud. Instant B2B payments create new opportunities for fraudsters to defraud global businesses. If a business loses money in real-time to fraud, it will struggle to trust banks that help the transfer.
IoT Opens New Fraud Avenues
Most consumers have many traditional accounts, and a host of digital accounts like PayPal, Venmo, or even WhatsApp. Many connected smart internet of things (IoT) devices like Amazon’s Alexa or Google Home can send money using voice commands. In a connected commerce ecosystem, we expect to see a spike in attacks via IoT-connected devices and social engineering attacks.
Challenger Banks Face Fraud Challenges
More consumers are needed for digital-first challenger banks. They’re achieving this in part by making it easier for clients to sign up immediately. They also want to appeal to younger customers, so they’re using social media to promote their services or teaming with digital influencers like YouTube and TikTok celebs.
Fraudsters know that challenger banks are less likely to have comprehensive fraud controls in place, don’t have the physical infrastructure to meet consumers face to face, and seek to make onboarding as painless as possible. Challenger banks are a prime target for fraudsters because of the combination of these variables.
Millennials & Gen Z Face Fraud
As more young people use digital banking, scammers are keen to take advantage of their lack of knowledge with the system. While younger individuals are more tech-savvy than their elders, fraudsters have devised some strategies to target millennials and Generation Z clients. Fake check frauds affect the younger generation just as much as they do the elderly. During the 2020 Christmas shopping season, one out of every five millennial shoppers was a victim of online fraud. For social engineering objectives, fraudsters would also scan these persons’ social media accounts.
Romance Scams
In Australia, romance scams were one of the most common throughout the pandemic, with victims losing an estimated $851 million AUD. Scammers use dating services or apps to approach their victims and appear to be romantically drawn to them. They beg for money for medical costs, automobile repairs, or plane tickets to meet in person once their prey has been emotionally attached. Finally, the con artists pocket the money and vanish. As more individuals turn to dating apps for companionship in 2022, fraud patterns like these are expected to persist.
Tips for Banks to Combat Fraud Trends in 2022
Customers should be informed about fraud trends in 2022.
The most critical action that banks can do to keep their clients safe is to educate them. Customers should be warned about all forms of fraud threats by banks. It’s important to remind clients, especially when it comes to get-rich-quick schemes, that if something looks too good to be true, it is. Banks must accept their responsibilities to assist consumers in remaining safe and making the best decisions possible.
Stress the importance of the impact on people’s lives.
Fraud assaults cause more damage than monetary losses. They also erode the confidence that clients have in their banks. Even if a customer’s cash are returned or compensated, they may lose faith in their bank and contemplate switching to a competitor. Banks should remind their workers of the consequences of fraud on their clients’ lives. Share stories about consumers who couldn’t pay their rent, place a down payment on a house, or pay their employees on time. This type of measure allows employees to see the human side of fraud and stop seeing financial crime and risk as separate entities.
Use Intelligence Networks to Your Advantage
The financial services landscape appears riskier than it has ever been in recent memory, with customers holding many financial accounts (and sometimes losing track of them), new IoT-connected devices becoming more active in financial services, more younger consumers using financial services, and challenger banks working to expand in the market. Banks need as much data as possible to prevent financial crime because there are so many different touchpoints to consider. Connecting to networks that allow players to share intelligence can aid banks in gaining a better understanding of the existing market risk and preparing for new, emerging dangers.
