Trends in Online Fraud — And How to Protect Yourself
As technology continues to progress, an increasing number of businesses are at risk for online fraud. Companies with the foresight to implement the most sophisticated security measures remain susceptible due to the ever-evolving methods of hackers and fraudsters. So, what can companies do to combat the threat of online fraud? The first step is to understand the playing field; once you know what’s out there, you can take appropriate measures to protect yourself. Below are the 5 prevalent trends in online fraud, coupled with ideas from the Interfor team on how to protect your company.
1. Cryptocurrency Fraud
Cryptocurrency scams are on the rise around the world, targeting target both individuals and businesses, particularly financial service providers. While most cryptocurrency ICOs are not scams, the field has become a rife with cybercriminals, and a prime concern for investors.
What you can do: If your company is considering investing in a cryptocurrency ICO, make sure to do your due diligence. Just because an ICO has a website doesn’t mean it’s legitimate. Additionally, if you do decide to invest, make sure to store your coins offline and back them up. In January 2018, millions of cryptocoins simply disappeared, leaving their owners with nothing. Back up your funds to avoid this hazard.
2. Omnichannel Fraud
Back in the good old days, people paid for products and services with cash, credit cards, or checks. Those payment options are still in place — but customers now demand more options. They want to pay in-person, online, and by mobile, in addition to the desire for a variety of payment methods to choose from. To stay competitive and respond to customer demands, many businesses now offer omnichannel payment options. But with so many different payment options, businesses become more susceptible to security breaches.
What you can do: Analyze the risk involved with each payment channel and focus your security resources where the risk is greatest. Invest in security solutions that will cover all your bases, specifically the areas in which your risk is highest.
3. Card-Not-Present Fraud
In 2017, card-not-present fraud (CNP) accounted for 81% of fraud cases and is even expected to outpace e-commerce growth. But like omnichannel payment options, companies cannot simply stop offering customers the ability to make online payments, which is where most CNP transactions occur.
What you can do: Jan Florian Richard, Director of BPO Finance at Arvato, recommends implementing a combination of AI technology and human decision-making skills to combat CNP fraud. Visa has its own recommendations as well, most of which involve using different tech tools for additional layers of protection.
4. Affiliate Fraud
Affiliate marketing programs are everywhere; from the shadiest online gambling sites to the most reputable financial services companies. The goal of affiliate marketing programs is to reward both the advertiser and the company they’re advertising for; however, the risk of affiliate programs are scams and fraud. When affiliate fraud occurs, companies can end up paying significant amounts of money in fake attribution fees and analyzing skewed analytics from affiliate channels.
What you can do: Be aware. Review all the data, insights, and analytics from your affiliate channels and keep an eye open for anomalies. Use both AI technology and have a human eye run over the figures to screen for bizarre activity that an automated program might not detect.
5. Data Breaches
The past few years have seen numerous large-scale breaches of databases belonging to major companies; Deloitte (2017), JP Morgan Chase (2014), Equifax (2017), and eBay (2014), to name just a few. While data breaches are harder for fraudsters to perpetrate, the payoffs are much larger, since they typically gain access to hundreds of thousands of people’s personal details, making it easy to commit fraud on a large scale.
What you can do: There’s no easy solution for preventing data breaches but coming up with a strategy is essential (as opposed to relying on a single tool). According to the Forbes Finance Council, your strategy should include bringing in a cybersecurity expert, including employees in your data protection policies, and of course, using sophisticated Internet security solutions.
While it is worrisome to think about this fact, a significant amount of online fraud happens internally. We want to believe that those we work with would not cause us harm, but it is wise to keep your eyes and ears open. Online fraud, unfortunately, is not going away; it’s only growing more sophisticated and more devious. The best way to protect your business from fraud is to be informed. Stay on top of the latest trends, make sure to review your company’s figures and analytics, and never let your guard down. While preventing fraud is a daunting job, it’s certainly possible when you know what to expect. The online landscape is moving very quickly when you need additional insights always remember the Interfor team is here to be that guide.