Digital fraud is on the rise
Fraud in the digital space is a problem businesses have been faced with since the dawn of e-commerce in the 1990s, and has been increasing in threat ever since.
Consumer demand for digital services and the rise in e-commerce and digital payments has led to more opportunities for cybercriminals and accelerated specifically digital fraud with identity theft being one of the biggest problems for consumers in the digital space. Technology has also increased both the availability of and accessibility to data resulting in sophisticated fraud attacks against a larger number of victims.
Why the upsurge?
Digital fraud is by no means a new phenomenon. With the steep rise in digital transactions following the COVID-19 pandemic, we’ve also seen the prevalence of digital fraud attempts on businesses and consumers alike. Fraudsters also target and seek out industries that may be seeing immense growth in transactions. Here are the top reasons why digital fraud is rapidly increasing:
- Fraudsters are taking unprecedented advantage of the chaotic global crisis to commit fraud (by fabricating donations, collecting payments or stealing benefits).
- As the e-commerce landscape changes, and retail purchasing shifts online – in particular, card not present (CNP) transactions where neither the card nor the card holder is present at the point of sale– the opportunities to commit fraud increase.
- Digital channels – i.e. social networks, dating apps, food delivery, transportation/e-hailing and vacation rentals – have revolutionised various industries. Fraudster have shifted their tactics to take advantage of rising in-app and online marketplace purchases.
- As payments move online, consumers are using peer-to-peer payments (P2P) and eWallet apps. With more than half of P2P transactions taking place between consumers and an unknown entity, the fraud risk is high.
- The proliferation of data sources has facilitated access to customer personal identifiable information (PII) which is often targeted for abuse and exploitation.
- A bonus of global commerce is the reach of online retailers and marketplaces. Cross-border transactions can be risky though, as they typically involve multiple countries. Individual jurisdictions struggle to monitor for fraud risk and grapple with varying data privacy and protection regulations across regions.
- The technologies that companies rely on to innovate and rapidly introduce new products and services, are those same advancements that are exploited by fraudsters.
While we may not be totally able to escape online scams, knowing how to act in the aftermath of being a victim is vital.