2023 Fraud Tips from CO-OP Solutions’ Blog
Consider that U.S. consumers lost a record $3.56 billion to online fraud in the first half of 2022 only. Credit card fraud is projected to increase at a 6.2% compounded annual growth rate through 2024.
In recent conversations with industry experts, Co-op’s network partners, and CU professionals, three fraud trends rose to the top. These trends inform Co-op’s top 3 fraud predictions for 2023:
1. All Digital, All the Time
According to Juniper Research, global e-commerce fraud loss is projected to reach over $41 billion by the end of 2022. That more than doubles the $20 billion posted in 2021.
Why is fraud exploding within the digital channel? There has been a profound change in consumer purchasing habits that accelerated during the pandemic. With more people buying goods and services online, via mobile devices, using digital wallets, and other contactless methods of payment, opportunistic fraudsters have moved to the digital realm. Also, quick adoption of these mediums by retailers put the implementation before security. This can offer some security loopholes fraudsters took advantage of (such as credentials on file)
One result of this shift in consumer spending habits has been the rise in card-not-present (CNP) fraud. Card-present fraud is projected to remain flat over the next few years, due to chip and PIN readers. CNP fraud is expected to account for 90% of the overall growth in U.S. card fraud losses from 2022 to 2024.
2. Phishing, Smishing, and Vishing
Phishing has been around for decades and involves scammers using email to force victims into providing their personal or financial information for purposes of account takeover. More recently, criminals have begun using other popular channels of engagement. One such approach known as “smishing” entails the use of SMS text messaging. Unwitting victims are enticed to call an 800 number or click on a hyperlink, where they are directed to a scam site and asked to provide confidential information. ”Vishing” takes a similar tack using voice communication (most commonly Voice over Internet Protocol or VoIP). For example, 37% of scams reported by ITRC in the first half of 2022 were employed using Google Voice.
Phishers and smishers will often spoof popular brand names to get their victims to click through. The top organizations impersonated by phishers worldwide included Microsoft (13% of attacks), Google (11), Facebook (10%), Apple (10%), and PayPal (6%).
3. Account Takeover Continues to Grow
According to estimates from the Aite Group, identity theft losses will reach $635.4 billion by 2023.
Account takeover (ATO) fraud is a type of identity theft that involves a series of seemingly harmless steps. The fraudster first gains access to a victim’s account through phishing or other means, and then makes changes to the account holder’s personally identifiable information and contact info, resulting eventually in a complete takeover—often without the victim understanding what has occurred.
More than one in five US adults have been a victim of an ATO attack. And the losses can be significant, averaging $12,000 per victim. A 2021 study by the European Payments Council tracking COVID-related fraud spikes showed ATO attacks with the highest surge (282%), followed by phishing websites (250%).
ATO fraud will continue to grow as digital use increases and consumers continue to employ sloppy password hygiene, such as using the same passwords across multiple sites and accounts. Moreover, ATO fraudsters are using ever-more sophisticated tactics, such as “deep fake” attacks, which employ synthetic IDs and combine both real and fake identifying data to form an entirely new “person.” Fraudsters show remarkable patience, holding onto a made-up ID profile for up to two years before activating the fraud. We expect synthetic IDs and fake accounts to continue to evolve and adapt to emerging authentication practices.
It pays to keep your passwords unique and hard to guess, as well as to learn as much as you can about how fraudsters try to take people’s money. Click here to get the debit card fraud number. To read the whole article, click here.