While the pandemic may have stalled many global activities, it is clear that it did not slow down fraudsters. In fact, as transactions went increasingly digital, we saw significant growth in fraud, data breaches and financial crimes. This trend poses a great risk to businesses and consumers alike. Just as the market is not standing still, neither is fraud.
One of the primary goals of fraud is financial gain and there are numerous ways that fraudsters go about doing so. In one form, fraudsters will use different methods to steal individuals’ identities and use those identities themselves through unemployment claims and other types of exploitations. They will also use that stolen information to create synthetic identities that they can use to take advantage of businesses with ineffective protective and verification measures. A different form of criminal behavior focuses on the laundering of money which can include the use of prepaid cards or money mules to move money as part of a larger money laundering scheme.
Fraud Trends in 2020
Identity Theft & Synthetic Identities: There is no shortage to the different forms of identity fraud that is taking place. For instance, with COVID-driven unemployment claims, there has been a fair number of fraudulent claims. Often, they may be taking advantage of non-existent or slow identity verification systems to use real or synthetic identities to steal what could be billions of dollars’ worth of unemployment benefits. Financial elder abuse – when someone illegally or improperly uses a vulnerable senior’s money or other property – has seen an uptick of 30-40% since the start of the pandemic. In many cases, this is the result of doctoring identity documents or using manipulated verification photos to beat an online identification process.
Account Takeover: Account takeover (ATO) is where fraudsters acquire an account holder’s login credentials to take over bank and other online accounts to steal and launder money. A recent study found that 57% of businesses are seeing higher losses as a result of account takeover fraud.
Money Muling: Money muling is where a third party accepts money on behalf of a fraudster and later transfers the money to them. This method is seeing an increase since the beginning of the pandemic because it leverages a “clean” identity and avoids some of the fraudster’s bad reputation.
Fraud Prevention in 2021
As we look ahead to 2021, there’s little doubt that fraudulent and criminal activities will continue to grow and that fraudsters will continue to evolve and be more creative with their methods. To hinder these attempts, businesses need to stay several steps ahead. Outdated technology and fraud modeling, slow verification systems and inconsistent systems across channels are ineffective. 67% of businesses consider the use of advanced technology, such as AI, an important component for fraud prevention.
Automated software solutions help you scale and make decisions in real time to keep your business growing with the right customers. Platforms with an orchestration layer can easily integrate data for advanced proofing and risk scoring that allows businesses to understand and adjust to changes in individual risk profiles over time, without adding friction and lengthy processes.
Acuant makes it easy to get a holistic view of identities to establish and maintain trust, and helps you stay in front of rapidly changing fraud. Contact us to learn more about our Trusted Identity Platform for all of your Identity Proof, Compliance and Fraud Prevention needs.