The COVID-19 pandemic has sparked a digital payments revolution that has forever reshaped expectations. Today's consumers demand flexible, real-time payment options throughout their digital journey. As banks, fintech companies, retailers, and other businesses modernize and add apps and products to keep pace, criminals capitalize on weaknesses every time.
How do professional fraudsters fight back? A payments fraud study by Javelin and analytics leader SAS explored the fraud landscape in 12 countries and made eight recommendations to curb the epidemic.
Global Digital Fraud Trends: Assessing Past, Present, and Future is a continuation of the October 2020 report by Javelin and SAS on the escalation of digital fraud in the early stages of the pandemic.
The next chapter examines the evolution of digital fraud trends and their impact on consumers and businesses across the globe, based on the 2022 Global Fraud Landscape Market Study, Javelin's 2022 Identity Fraud Survey (reflecting insights from 5,000 U.S. consumers), and Interview leaders for financial services organizations face evolving fraud attacks.
The digital economy in 2023 presents new fraud trends with global impact
After the outbreak of the COVID-19 pandemic, the digital economy exploded rapidly. For fraudsters, the sudden proliferation of digital transactions and payment methods has provided countless new avenues for fraud. While anti-fraud experts grapple with how to adequately protect transactions, scammers are primarily concerned with pandemic-themed schemes and social engineering attacks.
But things have changed. Through 2023, the digital economy and the global scam economy created by Javelin will continue to exist and will develop in parallel. According to the report, the top schemes of 2020 have been replaced by a plethora of scams: romance scams, fake home employment opportunities and among them popular investment schemes.
Fraud varies by region, troubling local authorities and anti-fraud experts
Globally, the threat is more or less the same, although certain fraud types manifest and grow differently in different regions and countries, thus presenting corresponding challenges for local anti-fraud professionals, law enforcement and governments .
Regional trends and national signature issues revealed in the 12-country study and explored in the webinar series include:
AFRICA: South Africa's new Faster Payments scheme will not only facilitate faster payments, but also formalize them, helping to reduce cash-based crimes that have long plagued the country. Related payments modernization is also expected to help countries curb rampant cross-border money laundering and terrorist financing by accurately identifying senders and recipients.
Asia-Pacific: According to a Singaporean banker, perpetrators are devious as robocalls, phishing and phishing affect global citizens who primarily bank via their mobile phones. In response, financial firms in Singapore are enacting push notifications and daily transaction limits for account holders.
With 1.3 billion registered citizens (99% of Indian adults), Aadhaar, India's digital biometric ID system, provides a global template for other countries, including Malaysia and Sri Lanka. In Australia, digital identity verification provided by ConnectID and myGovID is steadily replacing traditional credentials.
China's alternative digital payment ecosystem, offered through social media giant WeChat, has seen explosive adoption, with QR codes dominating digital payments.
Europe: In the UK, open banking continues to drive digital innovation, and the Bank of England is considering launching a central bank digital currency. France marks a permanent change in consumers' digital purchasing and payment habits with the launch of a national identity scheme for smartphones.
Despite the challenges posed by political and environmental conflicts to Italy's financial sector, more than 30 million citizens have adopted its public digital identity system.
Meanwhile, organized crime has prompted Europol to launch a nationwide awareness campaign about money mules.
North America: Embedded loans and buy-now-pay-later (BNPL) financing are growing globally, especially in the US, where more than two-thirds of consumers say they are likely or very likely to use BNPL again after their first use.
Swelling fraud at France's national bank is plaguing regulators, merchants and payment platforms. The Federal Reserve's FedNow instant payments service will launch in mid-2023, promising safer payments and greater interoperability.
Canada's national identity program is helping to create the infrastructure to give citizens seamless access to government, financial and healthcare services. In Mexico, prepaid debit cards continue to thrive, while advanced digital payment options fuel a boom in e-commerce.
SOUTH AMERICA: Peer-to-peer (P2P) payments culture is thriving in Brazil through its PIX system, and fintech investment among the unbanked is at an all-time high. Nonetheless, a plethora of data breaches, scams, and malware attacks threaten the country's enormous potential for digital growth, requiring strong fraud and corporate security safeguards.
Digital inclusion fraud strategy points the way with eight expert strategies
The report makes eight key recommendations to combat fraud in the digital age: Multifactor authentication and account-based alerts should be considered essential, not optional. Equally important in this guidance is the integration of monitoring solutions onto a powerful AI-driven platform.
Careful layered deployment of machine learning models, biometrics, and contextual assistance tools can help financial services firms make faster, more accurate decisions, and scale across all verticals. "
Solutions must be interwoven and based on shared data streams to effectively counter the increasingly sophisticated tools and tactics we see being used by criminals around the world.
According to the Federal Trade Commission, U.S. consumers alone lost $8.8 billion to fraud last year, an increase of more than 30% from 2021 to 2022.
Consumer trust in the ever-expanding global digital payment ecosystem is imperative, and this trust is based on the effective use of advanced customer authentication and anti-fraud technologies by businesses, including artificial intelligence, machine learning and biometrics, to Detect and prevent cross-channel fraud.