10 Fraud Trends to Keep an Eye On in 2021

by SOUL
10 Fraud Trends to Keep an Eye On in 2021

As more and more businesses move their operations online, so do fraudsters. And because fraud is adaptive, the biggest challenge is to stay on top of the latest trends.

But don’t worry, we’ve compiled a list of the 10 trends you should look out for this year – along with some tips on how to flag fraud, investigate it, and prevent it in your online business..

#1 Chargeback fraud is a growing problem for online stores

Chargeback rates going up inexplicably? You may be the target of online fraudsters. This is what happens when they use stolen credit card numbers and process payments on your site. The real cardholder notices the payment, and blocks it with their bank. It’s you who has to pay the admin fee, and also refund the original cardholder.

This can be extremely expensive, especially for small to medium businesses. The solution is to deploy the right monitoring tool – ideally with an end-to-end fraud detection platform.

#2 SIM-Swapping attacks make 2FA ineffective

If you thought that 2FA (2 factor authentication) was safe these days, think again. Fraudsters have found a number of ways to bypass it, mainly by calling a telecom operator and asking to have their number transferred to a new SIM card.

This allows them to take control of everything, from social media accounts (Instagram, Facebook, etc…) to whole bank accounts.

#3 Deepfake technology is becoming increasingly effective

Deepfake technology uses artificial intelligence to create content using a person’s voice or face – without their consent. We’ve already seen it used successfully by fraudsters. The most famous case was when an employee was called by their boss to transfer a large sum of money to a new account. It turned out that the executive’s voice had been recreated using deepfake technology.

#4 Multi accounting makes it hard for marketers and iGaming operators

Multi accounting, as the name suggests, is what happens when one person creates more than one account on your website. The goal is to benefit from signup bonuses and special promos for referring new users, or to exploit certain games in the iGaming world.

It’s very difficult to detect multi accounting, because some organised fraudsters know how to create entirely new identities using stolen IDs, spoofing browsers, and even an entire fake cookie history.

#5 Crime OPS is on the rise

This is a more organised for of fraud, when certain cybercriminals offer their services for a fee. It may be more difficult to fight for organisations that don’t have the resources or time to manage fraud with the best tools, because they can’t match the sophistication of these organised criminals.

#6 Data breaches continue to trouble cybersecurity experts

Data breaches are an ongoing problem in the world of fraud and cybersecurity. You may have seen on the news that every new month a record-breaking amount of customer records is made public by fraudsters. The problem is that these accounts end up on the darkweb, where they are sold to the highest bidder on marketplaces.

#7 ATO Attacks are on the rise due to data breaches

ATO attacks, or account takeover attacks are the direct results of these data breaches we mention above. When fraudsters manage to get a hold of users’ real login details including email address and password, they will log onto the targeted website and exploit it for any valuable information.

Sometimes they will drain the account completely (for instance if there are reward points or gift cards associated with it). They will also look for linked accounts to try to get into these ones too. In short, an account takeover attack is the gift that keeps on giving for fraudsters – it may give them access to many more accounts, which they can drain of value for profit.

#8 Affiliate fraud becomes a bigger problem for marketers

If you’ve ever worked with affiliates to bring traffic to your site, install more apps or even signup to your service, you will already be familiar with the different payment programs.

The problem? Fraudsters know exactly how to trigger your affiliate rewards, and they can automate the process using bots. This means you will be left with loads of invalid signups, conversions that end up in chargebacks, and more.

#9 Return fraud is also problematic for online stores

Because of Amazon’s dominance in the online retailing world, their policies for returns tend to set the bar for everyone else. This means that customers expect you to offer free returns with zero delivery charges. It also means that fraudsters will abuse the system in order to get their money back, and return defective items, or to deplete your inventory (if they are your direct competitors).

#10 Buy Now Pay Later is also a target of scammers

Last but not least, you may have already been keeping an eye on the rise of BNPY companies (buy now pay later) such as Klarna. These companies allow you to take credit with 0% extra fees, which is supposed to help boost sales for online stores and merchants of all kinds of goods and services.

The problem is of course that fraudsters understand how to create Klarna accounts and to essentially become defaulting credit borrowers. It’s the exact same techniques we already see in the world of fast loan and payday loan companies, where users sign up to borrow money with 0 intentions of paying it back.

Key Takeaways – Make sure your business is protected from fraud

The good news amidst all this sea of bad ones is that it’s also easier than ever to protect your business against fraudsters. While in the past you had to rely on legacy expensive software, these days it’s absolutely possible to deploy fraud prevention in one click, or via API call to make it IT developer friendly.

Some innovative solutions even let you prevent fraud using a Google Chrome plugin, so you can have one-click data enrichment in seconds.

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