The banking landscape has fundamentally changed. Consumers across the globe are wholly adopting digital banking and ecommerce – according to Feedzai’s 2021 financial crime report, online transactions increased by 109% this year.
However, the USD amount of online fraud has matched this upward trend; the same 2021 report found this type of fraud increased by 23%. The uptick in digital transactions has provided bad actors with the opportunity to scale their operations. However, it’s also true that digital fraud had been steadily rising year-on-year long before the pandemic hit. What’s more worrying now is that fraud and money laundering are increasing despite efforts to safeguard against the heightened danger.
Three main trends that emerged in 2021 and are here to stay
Part of the issue is that cybercrime is becoming an increasingly sophisticated (and lucrative) illegal industry. Attacks are often the coordinated activities of organised crime gangs, which can operate much like legitimate companies and use advanced technologies to perpetrate crimes.
As a result, there are three main fraud trends we expect to see top of the agenda next year:
1. Mobile threats have become a dangerous reality
Europol’s Internet Organised Crime Threat Assessment (IOCTA) 2021 demonstrates that mobile threats have become dominant over the past year in the cyber-dependent landscape.
For example, mobile malware always has been a ‘looming’ – but very much ‘in-the-future’ – threat inhibited by a lack of scalability. Unfortunately, bad actors seem to have finally made a breakthrough in overcoming this problem based on the jump in the number of mobile malware reported by law enforcement agencies over the past year.
Mobile banking trojans likewise continue to add new tactics and techniques for stealing credentials and other sensitive information as this year comes to a close. For example, banking trojans such as Cerberus and TeaBot are now capable of intercepting text messages containing one-time passcodes (OTPs) and two-factor authentication (2FA) applications such as Google Authenticator.
2. Criminals mix fraud techniques as phishing and social engineering increase
Legitimate personal information has become increasingly available and accessible on social media due to data breaches, making it easier than ever for bad actors to use social engineering to fill in the gaps.
Armed with this information, bad actors are increasingly using phishing and social engineering techniques to heighten the credibility of their impersonation or hugely improve their chances of success by targeting their attacks, such as in CEO fraud – a type of spear-phishing attack where the attacker impersonates your CEO. What’s more, mobile threats can self-propagate through similar techniques. FluBot – one of the most prolific mobile banking trojans wreaking havoc in Europe and the US – spreads by sending phishing text messages from the infected device to its contact list.
3. Contact centre fraud to proliferate further
Also due in part to data breaches as well as to industry trends such as EMV transition, the intent of the contact centre to deliver positive experiences to customers can also leave it open to exploitation by bad actors. Sitting as it does as an important human link between businesses and their customers, it is a prime target for social engineering techniques. According to an Aite Group report, 61% of account takeover losses can be traced back to the contact centre at some point, and in an increasingly digital age, fraudsters will continue to target it.
2022: The year of RiskOps
Guaranteeing optimal protection against a complex fraud landscape next year will require multiple layers of security, an approach called ‘RiskOps’. Gartner has highlighted the importance of protecting users by collecting and analysing data on every level, including at the device level, behaviour level, historical data, cross-channels and cross-devices, and using server-side analytics, including machine learning.
As Gartner’s payments fraud expert and Senior Director Akif Khan notes, this is particularly important when considering that different channels present different challenges. For example, in online banking, a customer will log in again and again, whereas, with ecommerce, consumers often create new accounts to perform a transaction or conduct guest checkouts.
The upshot is, omnichannel data holds the secrets of truly effective fraud prevention, and the more data you have, the more keys you’ll find to unlock these secrets. Next year, we will see a consolidation of data into single platforms that collect and analyse data across the entire user journey, from onboarding to account activity to transactions. This is the core principle of RiskOps; unifying this information is the best way to continuously protect against the broad spectrum of fraud and money laundering – breaking down data silos for truly effective risk management.
About Ken Jochims
Ken Jochims is Director of Product Marketing at Revelock, a Feedzai company. Ken has over 25 years of enterprise software product marketing experience delivering fraud prevention, customer support, identity and access management, and IT infrastructure solutions to financial institutions and Fortune 1000 companies. Before Revelock, Ken worked for Arxan Technology, Neustar, ThreatMetrix, Guardian Analytics, Genesys, CA Technologies, NeXT Computer, and Apple. Ken received a B.S. in Engineering Technology from California State University, Long Beach.
About Feedzai
Feedzai is the world’s first RiskOps platform and the market leader in safeguarding global commerce with today’s most advanced cloud-based risk management platform, powered by machine learning and artificial intelligence. Feedzai is securing the transition to a cashless world while enabling digital trust in every transaction and payment type. The world’s largest banks, processors, and retailers trust Feedzai to protect trillions of dollars and manage risk while improving the customer experience for everyday users, without compromising privacy.
About Revelock
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