Without doubt, digital fraud is on the rise. Experian found that losses from fraudulent identities increased from 51% in 2017 to 57% in 2019, while PwC estimates that these crimes cost companies $42 billion in the last 24 months.
Organizations, consumers and even governments are struggling to respond effectively to the new wave of crime, which is driven among others by the following 5 factors:
- Exploiting the COVID-19 crisis
The COVID-19 pandemic spurred an enormous shift in consumer and business behavior. More and more activities moved online, thus creating a bigger market for digital fraud. In the United States, for example, tactics include stealing stimulus checks and unemployment benefits, collecting payments for fake COVID-19 treatments, tricking Americans into donating to fraudulent charities, and more. According to the Federal Trade Commission, Americans have lost $145 million to fraud related to COVID-19.
- The trend towards digital banking
Today’s consumers are accustomed to carrying out transactions online, including banking and payment transactions. As a result, more and more legacy banks are going digital with online account onboarding and transaction approvals, making it easier verify identities. A new breed of “challenger banks” – born and doing business entirely in the online world – are also becoming increasing popular, but these institutions’ customers often have “thin file” credit histories (i.e., don’t have much credit data). Less data means a greater risk of fraud.
- Online payment transactions
Peer-to-peer payment (P2P) and eWallet apps are becoming increasingly popular. These apps are most popular in Europe and Asia but are becoming increasingly popular in the U.S. too, with 71% of Americans saying they have used a P2P payments platform. Users turn to these platforms to digitally split dinner checks with friends, send money to family members in other parts of the world, pay for services from a local vendor, and more. But with more than half of P2P transactions taking place between consumers and an unknown entity, the risk of fraud is high.
- New consumer expectations
Today’s consumers expect convenience and may leave if the online experience poses too many barriers. As a result, banks and retailes are reluctant to impose the most stringent fraud prevention measures as these often flag or even reject real transactions, resulting in customer frustration and lost sales. Meanwhile, cybercriminals understand the struggle these organizations face and strike where they can to target such vulnerabilities.
- Technological advancements
Fraud methods and operations have grown ever more sophisticated. From phishing to old-fashioned phone scams that are supported by digital payment capabilities to installing malware capable of hijacking online bank accounts, criminals are becoming ever more sophisticated. In addition, it has also become easier to access cheap, on-demand computing power or deploy algorithms using machine learning that are capable of manipulating fraud detection systems. The traditional rules-based fraud prevention systems that organizations have relied on for years now struggle to keep up.
Fraud protections needs to be designed holistically
The best approaches to tackling cybercrime are comprised of many different measures that tackle different areas. For example, these could range from network and server protection solutions to detect malware to installing identity verification solutions, establishing risk parameters, and analyzing customer transaction patterns using machine-based learning risk assessments to identify suspicious transactions.
In addition, there has been an increasing trend of global collaboration to combat cybercrime, for example through the i3 Forum. The i3forum is a non-profit industry body focused on driving global collaboration and innovation across the international communications ecosystem through an open and inclusive model. Such organizations are helpful in sharing best practices and alerting members of new developments in the industry.
Tackling fraud through the i3 Forum
Telin is proud to announce that we have recently joined the i3 Forum, in line with our commitment to delivering the best solutions for our customers globally. By joining i3 Forum, we are aligning ourselves with like-minded organizations to collectively fight against digital fraud.
The i3 Forum and its community develops practical recommendations, tools, solutions, and policies to help understand consumer behavior, leverage technology, adapt to regulatory requirements, and foster trust in international communications, including mitigation of fraud. For example, i3 Forum has recently signed a Memorandum of Understanding (MoU) to combat SMS fraud in France, Paris, further enhancing its global network capacity.
As we embark on this journey with the i3 Forum, we strongly believe that by participating in their programs, we can create an agile, adaptable, and profitable carrier business of the future.
Find out more about Telin
To learn more about Telin and our collaboration with the i3 Forum, visit our website at www.telin.net. Stay updated with our latest news by following us on Instagram (@telin_official), LinkedIn (PT. Telekomunikasi Indonesia International), and Twitter (Telin). For any further inquiries, please email us at firstname.lastname@example.org.
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