Fincrime prevention expert SEON has released its latest report, which highlights the worrying growth of fraud in 2023. Here, the company’s CEO and Founder, Tamas Kadar discusses that trend in more detail. Specifically, Tamas outlines what is causing a large increase in online fraud attempts, delving deeper into how this threat has evolved in the past year.
We might only be in March, but 2023 has already delivered us some big stories. From spy balloons to banking collapses, it’s been an action packed few months for headline writers across all four corners of the world. Amidst this deluge of news, it’s easy to see how some stories have been missed. I know one that fits that description precisely, the worrying growth of online fraud across the internet.
Of course, online fraud is nothing new. However, since the end of last year, the issue has continued to worsen. In fact, we recently released a report that highlighted this worrying trend in more specific detail, and questioned why it might be happening. As the report underlined, recent developments in the field have rendered previous anti-fraud solutions obsolete and are necessitating new approaches from businesses.
AN UNWELCOME RISE
If you didn’t manage to read the report, then let me give you a quick breakdown. Between September to December 2022, we found that the average amount of money that fraudsters were trying to steal per transaction had increased by 300%. Between October to December 2022, we also saw a 12.9% rise in suspicious user activity across our entire platform. Simply put, this concerning uptick is not getting the attention it deserves.
Alongside these increases, we’re also seeing fraudsters beginning to incorporate more advanced forms of tech into their operations. Again, from our research, we’ve learnt that fraudsters are becoming more sophisticated when looking to commit fraud online. For example, when looking to hide their activities, fraudsters increasingly forego simpler methods to leverage more advanced technologies, such as AI and machine learning.
ADDRESSING THE ISSUE
This evolution in fraud has led to the rise of a new type of fraudsters, which fraud expert, Frank McKenna has previously referred to as ‘shapeshifters’. Using AI and other tools, fraudsters fitting this description constantly shift and shape their approach to fraud to better exploit gaps in defenses. What’s more, these technologies allow fraudsters to differentiate attacks to avoid detection and improve the effectiveness of their attempts.
This shift constitutes a lowering of the barriers around fraud, and has come at a time when people are facing intense economic pressures. When combined, these two issues are leading to an explosion of fraud across the internet. However, the same macro-environment pressures that are driving more people towards committing fraud are being felt equally by businesses too, so this trend can’t be allowed to continue.
REACTING TO CHANGE
Whether it’s using machine learning in combination with fraudulent bots and other automation methods to create more efficient attacks that better evade rudimentary velocity checks, or utilizing large language models to create bespoke, differentiated phishing attacks that are infinitely more believable, or even understanding the vary levels of payment fraud that occur, fraud is evolving online. For the first time, we’re seeing how powerful these technologies can be when they fall into the wrong hands.
It’s now time for companies to recognize this shift and to formulate new plans on how they can respond to the challenge. Ultimately, it’s unviable for businesses to continue with a ‘business as usual’ approach. Instead, companies need to ensure they’re engaging with more modern methods of online fraud prevention technologies to get the best protection possible, and to stop this boom in its tracks.
FIGHTING FIRE WITH FIRE
We are now left in a situation where it is best to fight fire with fire. Innovative online fraud prevention platforms, such as SEON, which leverages AI technologies, including whitebox and blackbox machine learning modules can help to mitigate this threat before it grows any further. By adopting solutions like this, anti-fraud professionals can leverage AI technologies as a force for good and turn the tide on this growing threat.
It’s encouraging to see that many fraud managers are already following this approach. In fact, our research shows that whitebox and blackbox machine learning modules are now increasingly relied on to tackle online fraud attempts and have experienced increases in usage of over 30% and 46% respectively since September 2022. That’s a step in the right direction, but there’s still work to be done.
DAWN OF A NEW ERA
Clearly, the risk of online fraud is now greater than it has been in some time, and businesses are starting to feel the pinch caused by online crooks. To fend off this growing threat, companies must start to make better use of modern forms of fraud prevention, which leverage the same technologies increasingly being deployed by the fraudsters themselves. Thankfully, solutions like this have never been as readily available as they are today.
Ultimately, it’s important to remember that these technologies are more suitable in the battle against fraud then they are in the pursuit of it. Right now, companies not leveraging such systems are fighting with one hand tied behind their backs. However, when both sides are fighting with the same tools the odds will swing once again in favour of those on the good side, we just need to make sure it happens in a timely manner.
To read our 2023 Fraud Trends report, please visit: https://seon.io/resources/fraud-trends/
For more information about SEON, please visit: https://seon.io/
