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Financial fraud grows 650% with increased use of online banking and e-commerce

 

The year 2020 was marked by a huge increase in financial fraud globally, driven by the rapid adherence to internet banking and online commerce, as a result of the covid-19 pandemic, according to the financial crimes report released by Feedzai. The data science company, which specializes in detecting and preventing the risk of financial fraud, compared the volume of bank fraud and cybercrime in the fourth and first quarter of 2020 with the last quarter, the period immediately prior to the upsurge of the pandemic.

The study found that there was a 650% increase in account acquisition in the fourth quarter compared to the first three months of last year, with fraudsters taking advantage of the growth of online accounts during the crisis. The report’s authors note that the expansion of online banking and real-time payment functions has made it easier for fraudsters to transfer funds or buy goods with stolen credentials once an account has been accessed.

There was also a 250% increase in fraud attempts in online banking services detected between the two periods, driven by a 200% growth in the use of mobile banking. The positive side of this shift to digital banking, if you can say that, is that there has been a reduction in fraud at branches and through telephones.

As demand for digital media increased last year after measures of social disengagement, including e-books and streaming music and movies, attempted fraud attacks through these services have increased by 78% since January 2020 in North America and in the European Union.

Regarding card fraud, the researchers found that there was a 48% drop due to the reduction in face-to-face card payments, as purchases in physical stores decreased during the pandemic, with this type of transaction falling 20%. On the other hand, online card transactions increased by 35% between the first and fourth quarters of 2020 – unsurprisingly, fraud due to this increase has increased, representing 70% of all illegal transactions.

“2020 was a year of rapid growth in financial crime. Fraudsters have tried to take advantage of the convergence between a fast-paced digital environment and a new wave of inexperienced consumers to perpetrate a multitude of attacks that have created a significant increase in fraud, ”said Jaime Ferreira, senior director of global data science at Feedzai.

“Financial institutions need to invest more in technologies to protect their customers while developing educational approaches. Robust technology and informed consumers are a powerful combination in the fight against financial crime ”, he added.

Source: CisoAdvisor

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