Over the past few months, the COVID-19 pandemic has shaken up many industries. Restaurants have had to adapt by providing takeaway delivery services, retailers that previously only had a physical presence are now selling goods using new websites and apps, and the gaming industry has seen a surge in players as people have been stuck at home with little to do. As a result, we’ve seen the mass digitisation of a number of industries, which is directly responsible for the 50% spike in internet usage across Europe seen by Vodafone
For many companies this change has been a positive development. However, we are now facing new challenges as fraud increases in correlation with online activity. And, while many industries have been fast to react to the virus and moved operations online, many more businesses don’t have the solutions in place that enable them to respond to fraud at the same speed.
Not all fraud systems aren’t equipped for the change
Although there are many highly effective fraud solutions available, there is a lag in the industry as many depend on archaic legacy systems. The current platforms that most fraud prevention companies are providing take weeks to implement, rely on multi-year contracts and require sperate solutions for different sized businesses.
Consequently, businesses new to the online space are feeling the full force of cybercrime before they’ve even had chance to implement fraud prevention tools. This could cause lasting damage for many businesses, especially following a decline in cashflows during lockdown.
Knowing the numbers
Furthermore, as we move towards a new normal, the rise in online activity is likely to continue as customers are now comfortable accessing services that previously weren’t available online and businesses are just as happy to provide them. The root of the issue is, many are unaware that this is the perfect storm for cybercrime and are unable to protect themselves against it.
In late 2018, research from Hiscox identified that an SME was successfully hacked every 19 seconds in the UK, but at SEON, according to trends we have seen on our own platform, we believe this has risen by at least 50% in the past three months. As a result, there may now be as many as 6,500 successful cybercrimes committed against SMEs every day in the UK.
Fraud trends to keep an eye on
What’s more, not all of these threats are of the same nature as what was being experienced last year. Cybercriminals are organised and business owners must understand the types of fraud they are facing to tackle the problem head-on and prevent themselves from being hacked.
Firstly, account takeovers (ATOs) have moved to the next level in 2020. This is a problem across all industries and while organisations spend millions on preventing chargebacks and transaction fraud, ATOs are not taken as seriously as they should be – both by merchants and fraud prevention teams.
Phishing has also been a growing problem throughout the pandemic and has been sophistically implemented to take advantage of those feeling the financial burden of furloughs and job losses, who are being targeted by scams that offer financial aid.
While bot attacks and distributed denial-of-service (DDoS) attacks are often responsible for data breaches, more than 35% of the major data breaches started with phishing techniques. That’s before you even add other social engineering techniques, which also count as a form of phishing.
The final fraud types that should be on everyone’s radar this year are ID theft and synthetic ID fraud, which are being used against new services in the UK and US.
When it comes to these types of fraud, new security measures can increase customer confusion, which opens the door to fraud trends pertaining to data theft. A good example is the impact of new rules from the UK Gambling Commission, which force users to provide ID scans upfront. The problem is that these measures, while born from good intentions, create a massive demand for stolen and synthetic IDs. We’ve already seen how these bad IDs are used to target the payday and fast loan industries, and the size of that market is bound to increase in 2020.
And, similar to what we’re seeing with phishing scams, ID theft is being used to target those who have lost jobs due to the crisis, as false employment websites are being set up that steal identities.
A new approach to fraud prevention
Businesses need quick and effective ways to combat these types of fraud in an online landscape that is transforming quickly. There are new solutions available that help businesses overcome the problems posed by outdated legacy systems and allow them to integrate fraud solutions into their business models efficiently and rapidly.
We think the best way to do this is via a Google Chrome extension. By integrating fraud tools this way, businesses can have them up and running in a matter of minutes – this is vastly different from the usual several week process that takes place.
In addition, such a solution enables new levels of flexibility meaning that fraud prevention businesses can offer rolling monthly contracts and free trial periods, due to their ease of integration. This is a huge relief for fraud managers as not only can they respond to fraud near-immediately, but it removes the need for them to make any large and drastic decisions regarding contractual agreements.
As we head into a more digital future, built on the back of necessity during the pandemic, merchants must be able to use fraud solutions that allow them to be adaptable across several channels. The fraud industry will be integral to this, but first it must escape from the rut it has found itself in and provide customers with tools that are flexible and can be quickly implanted and used.
Global Banking & Finance Review
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