What does financial risk hold in 2022?

As fraudsters become more familiar with their targets and spend more and more time understanding their lifestyles, personalized scams will become the norm. Andy Renshaw, Senior Vice President of Product Management at Feedzai, discusses some of the tactics fraudsters will use to deceive consumers in 2022 and what looms on the threat horizon.

Customers who have adopted digital banking habits as a result of the COVID-19 pandemic are unlikely to revert to their pre-pandemic practices. The result is an increase in digital interactions and more targets for fraudsters to pursue using social engineering. Armed with personally identifiable information obtained through the dark web or through phishing (or even social media), fraudsters can launch Account Takeover (ATO) attacks and compromise a legitimate user’s account. On the other hand, if scammers cannot breach a customer’s account, they can use social engineering to trick victims into deliberately transferring money to them using authorized push payment tactics ( APP). This latest fraud has become particularly problematic in the UK.

Here are some of the ways scammers get creative to deceive consumers:

Watch and wait: With more effective online security measures in place, fraudsters are thinking bigger about maximizing their monetization opportunities. Instead of quick “smash and grab” attempts that involve breaking an account and quickly transferring money, they will patiently observe the financial trends of the victim. This includes details like when their paycheck is deposited and where they shop online. With this understanding, they will know when the victims will receive their wages and when they will have the most money. By performing layered research using social engineering or personal information obtained from phishing or malware attacks, scammers can carefully refine their message to make the scams more compelling.

Tell stories better: Banks have been working for years to provide more personalized services to customers. Unfortunately, scammers adopt the same strategy, creating highly personalized stories to deceive their victims. When a fraudster gains access to a victim’s bank account (or their email or e-commerce account, for that matter), they can learn important details about their life. For example, if they see that their victim recently made payments for a parking violation or paid for a medical procedure, scammers can adopt the persona of a city employee or a doctor’s office employee and pretend that a recent payment was not processed correctly. Then they tell their victim to split their credit card or send money to a bank account they control. Since the scammer uses these specific details, their scams have a better chance of working. Some scammers will create a portfolio of stories for a wide range of scenarios.

Quick enrichment schemes get bigger: Want to get rich quick? Scammers hope so and they play on well-established human behaviors like fear of missing out (FOMO). They will use FOMO to lure victims into get-rich-quick schemes. Some crooks will use the same social engineering tactics mentioned earlier to design a program specific to the lifestyle or demographics of their victims. Once they become familiar with their targets, fraudsters will use pressure tactics to convince victims that a unique, low-risk, high-reward opportunity is available to them. Cryptocurrency scams are becoming more and more popular with fraudsters for these types of schemes, which can cost individuals huge sums of money. The Australian Federal Police recently reported a 172% increase in cryptocurrency scams from January to November 2021. Unfortunately, the mystery and novelty of crypto makes these scams very appealing to scammers.

Romantic scams: Romantic scams have turned out to be one of the biggest scams in the pandemic, with consumers losing around £ 68million in 2020. Scammers approach their victims online using websites or apps from dating and claim to be romantically attracted to them. After convincing their target that their relationship is genuine, they ask them for money for medical bills, vehicle repairs, or plane tickets to meet in person. In the end, the fraudsters pocket the money and disappear. This trend is set to continue as more people turn to dating apps for the company in 2022.

And it’s not just more personalized attacks that will happen, fraudsters will also take advantage of new and emerging payment methods designed for convenience:

B2B real-time payments: After a long build-up, it looks like B2B Instant Payments are set to finally become a reality in 2022. When B2B Instant Payments make their debut, banks and businesses need to apply lessons learned from real-time consumer payments . After all, consumers expect 24/7 access to banking services. Businesses need to be prepared for how this increased payment speed makes them vulnerable to fraud. If a business loses real-time money to fraud, the organization will have a hard time trusting the banks to facilitate the transfer. Instant B2B payments open up new opportunities for scammers to quickly defraud businesses. This is why it is important that banks and companies implement the right guarantees

IoT confusion and connected commerce: Gone are the days when consumers have checking, savings and credit card accounts. Now, most consumers have multiple traditional accounts and a plethora of digital accounts like Paypal, Venmo, or even WhatsApp. And it does not stop there. Many smart Internet of Things (IoT) connected devices like Amazon Alexa or Google Home can send money using voice commands. And soon, it will be common for people to send money through social media platforms. If this all sounds like a dream come true for scammers, it is. In a connected commerce ecosystem, we expect to see an increase in attacks on IoT-connected devices and social engineering attacks. A disparate arrangement of finances calls for a new approach for banks to manage the financial risks of their customers.

Fraud challenges for Challenger banks: The exclusively digital and digital challenger banks must attract more customers. In particular, they achieve this by facilitating the rapid onboarding of customers. They also want to specifically attract young customers. They therefore market their services on social networks or partner with digital influencers such as YouTube and TikTok celebrities. Unfortunately, fraudsters are also looking to join competing banks. They realize that many challenger banks do not have the physical infrastructure to meet customers face to face and want to make the integration as smooth as possible. Considering the combination of these factors, fraudsters view challenger banks as prime targets.

Millennials and Gen Z face fraud: As young people join the digital banking system, fraudsters will be eager to profit from their ignorance of digital banking. While young people are more tech savvy in a social context than their older counterparts, scammers have found several tactics that have proven effective against millennials and Gen Z customers to take advantage of it from a point of view. financial. The latter group is the victim of fraudulent checks at the same rate as seniors. Meanwhile, one in five millennial shoppers have been the victim of online fraud during the holiday shopping season 2020. Scammers will also browse these users’ social media accounts for social engineering purposes.