Digital Trust & Safety Roundup: Payment fraud targets fintech, fraud industry insights and Sift’s latest product enhancements
Rapid advances in technology have led to fraud by making it easier for cybercriminals to collaborate and share information, but it has also made fraud more accessible to the everyday internet user. Below, our trust and security architects at Sift share their expertise on these new fraud trends – read on to learn about the latest payment fraud findings and industry insights, tips for securing your fraud strategy in downturns, and Sift’s latest product enhancements in our Digital Trust & Security roundup.
Payment fraud is on the rise in fintech, driven by fraud-as-a-service
Sift released its first Digital Trust & Safety Index of the year, highlighting rising payment fraud attacks in fintech, which saw a 13% increase between 2021 and 2022. Within the fintech sector, buy now pay later (BNPL) saw a massive 211% increase in payment fraud, followed by crypto exchanges, which experienced a 45% jump. Even more alarming, a surprising number of consumers surveyed have encountered offers to commit payment fraud, with some admitting to participating themselves or knowing someone who has.
These findings are consistent with the increasing ease with which anyone can find the tools or tactics to commit fraud online, creating a democratization of fraud as barriers to access are lowered. Driving this phenomenon is the rise of fraud-as-a-service (FaaS), where fraudsters market and sell their services on the deep and dark web.
“The rapid democratization of fraud provides even more opportunities for motivated criminals to expand their reach by ‘commoditizing’ their offerings and selling their services to perpetrate fraud against businesses,” explained Jane Lee, Trust and Safety Architect at Sift, in Fintech Times. “As cyber fraud continues to seep into everyday internet culture, trust and security operations have become the single point of failure or success for businesses.”
Jane Lee shares more insight on the latest findings at Paypers.
Preparing for recession-driven fraud
The economic outlook for the rest of this year remains volatile, as consumers continue to experience rising costs and the threat of a recession still looms. We know from previous economic downturns that this type of environment is a breeding ground for fraud, with cybercriminals targeting both businesses and consumers. Merchants who do not prepare for this likely increase in cybercrime can expect to face increased losses due to fraud and chargeback abuse.
Recently, Brittany Allen, Trust and Safety Architect at Sift, sat down with Digital Transactions to share the fraud lessons learned in 2022 and how merchants can prepare to minimize the impact of fraud in challenging times. Watch the entire webinar.
Scam industry takeaways from MRC Vegas
The Sift team was delighted to exhibit and present at MRC Vegas 2023, the leading conference for payment and fraud prevention industry professionals to network and share ideas. As well as presenting a ‘Fraud 201’ workshop and a session on how marketplaces fight fraud with collaboration, the Sift team had the opportunity to hear from a diverse group of speakers and engage with industry peers on the year’s key fraud challenges and trends.
A concern that came up frequently was the increasing rates of first-party fraud (friendly fraud), with the MRC reporting that 34% of merchants have experienced this type of fraud, amounting to an estimated $35 in additional costs for every $100 in disputes. These findings underscore Sift’s recent consumer survey results, which found that 23% of respondents who have disputed a purchase cited fraud as the reason, even when they had received the item or service and were satisfied with it. It is reasonable to believe that the number of consumers who commit first-party fraud is likely to be an undercount, as consumers are hesitant to admit friendly fraud when asked.
Kevin Lee, VP of Trust and Safety at Sift, shares several key takeaways from the conference in our latest blog.
Risk teams benefit from more control and transparency in fraud operations
As fraud threats become more extensive and complex, having a set of tools and strategies to effectively respond to both existing and new fraud is critical if businesses are to keep up. Sift’s latest product release – Workflow Backtesting and Percentile Scoring – gives fraud teams more control over their fraud prevention strategies and improved insight into changing fraud risks. With Workflow Backtesting, risk teams can run historical data through a new workflow to see how it will perform before publishing. And Percentile Scoring allows teams to make more accurate risk assessments and adjust their fraud operations in real time if necessary.
“Today’s fraud teams navigate fleeting fraud spikes and defend against the most sophisticated cybercriminals, all while working to maintain smooth and secure online experiences for their customers,” said Mary Writz, SVP of Product at Sift. “The current fraud landscape requires businesses to have intuitive, reliable ways to make real-time adjustments to fraud operations so they can be both reactive and proactive in the fight against fraud. Sift’s new platform capabilities help risk teams achieve these goals – by empowering our customers to take control of their fraud prevention strategy to best suit their unique business needs.”
Read more about Sift’s new product features in this blog by Sift’s Senior Product Marketing Manager, Jimmy Dunn.
Explore the latest payment fraud data and fraud trends in Sift’s Digital Trust & Safety Index.
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