In a latest study by Juniper Research, the findings suggest that online payment fraud losses could accelerate at an alarming rate to exceed $343 billion between 2023 and 2027. The targeted scams often include digital and physical goods, money transfer transactions and authorised push payments.
The number of new cases is on the rise as fraudsters look to engineer new ways to deceive businesses and customers and exploit trusted customer/corporate relationships. The digital world of e-commerce and banking which increasingly conveniences customers has enabled fraudsters to invent more elaborate schemes to achieve their end goals, using refined techniques such as phishing and pharming.
Emotional manipulation tactics are also more commonly used by fraudsters to gain the trust of their victim and enable transactions that seem legitimate to be orchestrated by the customer themselves. A range of fraud techniques exist including ‘Friendly Fraud’, where the merchant receives a chargeback request if a customer denies making a purchase or receiving the order.
The research indicates that fraudulent physical good purchases account for the most losses due to the additional profit offenders can generate from reselling goods.
The conclusions of the report calls on Digital ID and IAM vendors to assess their capabilities to integrate multi-factor authentication tools at the most vulnerable points in the customer journey, to increase resistance to any financial crime. Fundamentally, as report analyst Nich Manynards writes, “no two online transactions are the same, so the way transactions are secured cannot follow a one-size-fits-all solution”.
The major challenge to eliminate identity and data theft persists throughout the report despite its recommendations, acknowledging that customers simply do not recognise how identity theft is evolving and reappearing in different guises, including to manipulate human behaviour. The sophistication of social engineering techniques is most apparent in attacks on the unbanked population as fraudsters change tactic to targeting users of alternative payment products from Apple, Google, Amazon, WhatsApp, or Meta Libra/Novi.
The report also coincides with the recent findings of a UK Finance study into authorized push payment fraud which surged in the UK in 2021. Typically, this type of fraud is characterised by an offender impersonating or claiming to represent a trusted company in order to encourage the victim to make an unauthorised payment themselves.
UK Finance reported losses of £1.3 billion to APP fraud during 2021, an increase of 39% from the previous year. 195,996 incidents of APP fraud were recorded, with 40% involving fraudsters who impersonated the UK National Health Service, banks, and other government departments over the phone, by email, text or false websites.