The predictions stem from the fact that the worldwide digital transformation has led to a rapid increase in fraud, with the forecast saying, “fraudsters have gotten more creative, putting businesses and consumers at risk now more than ever.”
The forecast predicts more intricate challenges ahead.
“Fraudsters are continually looking for different ways to attack businesses and consumers,” says Experian Chief Innovation Officer Kathleen Peters. “Due to the unprecedented nature of the pandemic, there was a rapid shift to digital that brought way more consumers online.
“Meanwhile, companies tried to keep up with demand while also trying to validate identities and combat fraudulent activity,” she adds. “There was also the government stimulus programs that criminals successfully capitalized on immediately.”
Experian’s first prediction stems from the fact that the number of Buy Now Pay Later (BNPL) users in the U.S. has grown by more than 300% per year since 2018. That rapid growth continued in 2021, reaching 45 million active BNPL users spending more than $20.8 billion.
Experian predicts BNPL lenders will see increased identity theft and synthetic identity fraud—when a fraudster uses a combination of real and fake information to create an entirely new identity—this year.
The influx of digital currencies has also caused new scam opportunities. According to the Federal Trade Commission, increasing interest in cryptocurrency has driven a high number of investment scam losses.
From October 2020 through March 2021, 6,792 people reported cryptocurrency investment scam losses totaling more than $80 million—about 12 times the number of reports and nearly 1,000% more in total reported losses compared to the previous year.
The reported median loss was $1,900. Experian predicts these scams to continue as fraudsters set up cryptocurrency accounts to extract, store, and funnel stolen funds.
Experian also predicts ransomware attacks will continue to be a concern for companies looking to protect against fraud. The Future of Fraud Forecast suggests companies will be asked to pay a heavy ransom to regain control after ransomware attacks.
Once attacked, a company’s data is available for criminals to steal, which in turn leaves employees’ information vulnerable to attack.
“When it comes to businesses, fraudsters have two goals in mind: money and data,” Peters says, adding that businesses should implement a multi-layered approach to fraud protection.
Social media accounts and dating apps are also frequent targets of fraudsters. According to an FBI public service announcement in September 2021, the FBI Internet Crime Complaint Center received more than 1,800 complaints—totaling $133 million in losses—related to online romance scams in the first seven months of 2021.
Experian expects the complaints to continue, with fraudsters taking advantage of online-only relationship seekers by asking for money or “loans.”
Fraudsters frequently target the elderly population. Experian expects that to continue in 2022, as older people use the internet more than ever.
Awareness can help companies and individuals guard against fraud. Experian also offers fraud management tools intended to help people identify fraud, mitigate loss, and maintain their identity.
Ultimately, fraudsters seek financial gain, Peters says. “Their methods vary depending on who they are targeting.
“What businesses need now more than ever is a fraud prevention solution that is constantly evolving and changing to keep up with the trends and leverages data and advanced analytics to do so,” she continues. “With this approach, businesses can be confident that they are prepared to keep themselves and consumers safe from attacks.”
Credit Union Magazine’s Summer 2023 issue highlights the lending outlook for the rest of the year, how credit unions leverage fintech companies to boost digital lending, the power of lending partnerships, common Bank Secrecy Act violations, and the shift board members must make when becoming chair.
