Digital Transactions Authoritative, insightful and timely information for payments professionals
If there is one constant about fraud, it’s that it never takes a holiday. A new report from Nice Actimize, a provider of fraud-prevention solutions, reveals that attempted fraud transactions skyrocketed in 2022 by 92%, compared to 2021, and that the money criminals attempted to steal soared by 146%.
The research by Nice Actimize, which says it analyzed billions of transactions to arrive at its results, revealed the top two most common schemes were impersonation scams (76%), which occur when a criminal uses a fake identity to make a purchase, and investment/cryptocurrency scams (63%), which lure investors to purchase an asset with fake claims about its value or steal digital assets.
Common scams also include invoice and mandate scams (56%), which occur when the victim pays an invoice to a seemingly legitimate payee; purchase scams (33%), also known as authorized push payment scams, which occur when victims knowingly authorize payment to someone they believe to be a genuine seller; and advanced-fee scams (20%), which occur when the victim is promised a large sum of money in return for a small upfront payment.
Other scams posing a significant threat include unauthorized payments fraud (36%), customer first-party fraud (29%), authorized purchase scams (20%), and identity theft (20%).
Card not present (CNP) fraud also remains a nettlesome problem. Losses from CNP fraud are projected to total $48 billion in 2023, compared to $41 billion in 2022, according to the report.
With criminals increasingly using synthetic identities to perpetrate fraud, financial institutions must perform due diligence when opening a new account, as new accounts are 9.5 times riskier than mature accounts, the report says. Nice Actimize defines new accounts as those that have been open for 45 days or less.
“There’s also a significant application fraud issue [when it comes to news accounts]” the report says. “While [new account applications] might not tie directly to loss, [they] represent a foothold into maturing an identity, moving ill-gotten gains, and driving larger schemes associated with credit and loan products.”
To stay ahead of fraudsters, Nice Actimize recommends financial institutions make use of such fraud-fighting tools as advanced analytics, machine learning, behavioral biometrics, and high-quality and diverse data.
