How to Detect and Prevent Online Fraud in 2022

Online Fraud in 2022: What Trends Are Merchants Seeing?

Jeffrey Wixted

Jun 13, 2022

This year, and as we emerge from what is, hopefully, the worst of the pandemic, businesses are spending more time reassessing their ability to counter online fraud, especially considering the surge in eCommerce spending volumes and the need for increased security on digital channels.

While some companies may have invested heavily in technology to improve their fraud detection over the last 12 months, we know that cybercriminals have also kept in line with digital advancements and found new ways to attack.

Accertify’s recent webinar highlighted some of the major online fraud trends shaping the landscape this year and provided insight into how companies can proactively adopt technology to help mitigate emerging threats.

In a time of rapid digitization and a demand for real-time payments and mobile account creation, companies are facing increased pressure to identify risk and prevent fraud while also offering consumers a seamless experience.

What do these pressures mean in terms of fraud detection and protection?

Loyalty accounts that have lain dormant are a sitting target for fraudsters.

The pandemic has seen an increase in both the number of accrued loyalty points and accounts not regularly accessed thanks to travel restrictions. These dormant accounts with monetary value have become a prime target for fraudsters. With more than $48 trillion of unspent loyalty points1 globally, loyalty fraud is certainly an area that deserves attention.

The poor implementation of PSD2 will increase payment friction and lead to a rise in alternative payments

An Accertify and Arizent Research survey2 found that 37% of merchants surveyed revealed sales had decreased due to SCA enforcement, with added customer checkout friction (41%) and increased cart abandonment rates (38%). This card payment authentication friction, thanks to PSD2 could well lead to a rise in alternative payment methods to convert sales. And with every increased payment method, comes a whole new raft of ways to commit online fraud.

NFTs and the Metaverse potentially cause chaos for inexperienced investors.

As NFTs become more mainstream, unaddressed vulnerabilities could well allow fraudsters to prosper. As investment booms, criminals are taking advantage of a lack of experience and education from investors who aren’t taking the necessary precautions before sinking their money into the latest trend. In fact, in January NFT marketplace OpenSea reported3 that more than 80% of the NFTs created for free on the platform are “plagiarized works, fake collections, and spam.” There are also reported instances of fraudsters posing as OpenSea employees to gain access to assets and private keys.

Buy now, pay later will increase scrutiny.

Buy-now, pay-later options are on the rise. Research4 from NerdWallet suggests that the service outpaced personal loans last year and many larger companies are making the move into this form of payment.

However, regulatory scrutiny on this alternative payment method should provide greater transparency for customers, with a means to dispute a transaction should something adverse occur. Equally, merchants are likely to be able to get more insight and increased ability to discern risk and prevent fraud.

Privacy laws could serve to protect fraudsters.

Gartner predicts5 that by the end of 2023 modern privacy laws will cover the personal information of 75% of the world’s consumers. On one level this is great news for consumers, but it could mean it will become increasingly harder to track and access fraudsters’ data.

Accertify has a comprehensive platform available to address today’s threats with the agility to detect what comes tomorrow. With a simple API integration and real-time machine learning based risk decisions, our seamless approach makes it simpler to protect your organization while delivering an excellent customer experience.

Sources:

  1. https://thewisemarketer.com/data-and-privacy/48-trillion-reasons-loyalty-fraud-is-on-the-rise/
  2. https://www.accertify.com/wp-content/uploads/2021/04/followupgraphic_webinar12_SCA_rev3-GCO.pdf
  3. https://www.insidehook.com/daily_brief/tech/nfts-fraudulent-opensea-marketplace
  4. https://www.nerdwallet.com/article/loans/personal-loans/use-of-buy-now-pay-later-outpaces-personal-loans-in-past-year
  5. https://iapp.org/news/a/gartner-predicts-75-of-consumers-will-fall-under-privacy-laws-by-2023/