How to detect and prevent Fintech fraud

Fintechs and financial services have become increasingly important in recent years. As consumers expect convenience, accessibility and increased transparency with their financial transactions, the fintech industry has taken center stage. Unfortunately, however, cybercriminals and fraudsters have also taken notice and are attempting to exploit any vulnerabilities within fintech platforms to steal money, data and personal information from unsuspecting users.

There are ways to fight the rise of criminal and fraudulent activities within fintech industry. But first, what do cybercriminals and fraudsters stand to gain by targeting the fintech industry?

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Why are cybercriminals targeting fintechs?

Fintechs are attractive targets for cybercriminals looking to make money. While the potential to steal an unsuspecting user’s money is often alluring, cybercriminals can use a range of data inherent in the fintech sector for malicious purposes. In fact, cybercriminals will use information leaked in previous data breaches to their advantage. This includes using leaked or stolen user authentication or personal and sensitive information – such as usernames, passwords and email addresses – for follow-up attacks. This information, or the credentials obtained from a successful bot or phishing attack, can be used for any of the following downstream illegal activities and fraud:

• Account takeovers (ATOs) and identity theft: Cybercriminals use stolen identification to take over user accounts. This enables them to drain the account for money, reward points or other important data associated with the account. Fraudsters can also use stolen accounts to commit money laundering.

• Application Fraud: When cybercriminals leverage stolen or synthetic account information to create fake accounts on fintech platforms, including applying for credit.
• Bonus Abuse: This happens when fraudulent users exploit vulnerabilities to steal promotional benefits from financial services companies, such as cash bonuses or reward points.

Complicating matters for security teams tasked with preventing fraud is that increased volumes of traffic across apps — including mobile banking — and website endpoints can be difficult to categorize as “good” or “bad.” Increased scrutiny of this traffic may inadvertently harm the user experience of legitimate customers. This is why it is imperative that fintech companies place a renewed emphasis on detecting malicious human and non-human users with an eye to mitigating the threat they pose.

Detection is key to fraud prevention in the fintech industry

When it comes to stopping cybercriminals from targeting fintech, fraud detection is half the battle. However, this is easier said than done, as cybercriminals are good at impersonating good users to bypass defences. Many of these sophisticated tools have become a major cybersecurity concern as they can now be purchased and exploited by cybercriminals.

The rise of cybercrime-as-a-service (CaaS) offer has placed an additional burden on security teams. Potential cybercriminals can now buy online cybercrime “solutions” that allow them to carry out increasingly sophisticated attacks. For example, a low-skilled fraudster may purchase bots to automate many of the steps required to capture credentials from legitimate users that can be used for ATOs. The growth of CaaS means that even more cybercriminals than before can target fintech to steal both money and data.

Detecting these attacks is the first step to take before security teams can mitigate them. Using real-time signals when registering user accounts or login flows can help security teams detect suspicious activity behind both human and non-human automated bot attacks. Modern solutions that provide machine learning (ML) decisions based on global attack signatures can also be a key differentiator in the fight against cybercrime and fraud.

Threats can be stopped in real time

Cybercriminals want to make money, and will often take the path of least resistance to do so when carrying out their attacks. That’s why, once an attacker is identified, security teams must increase their efforts. Making an attack financially unsustainable for cybercriminals is usually the best way to make an attacker look elsewhere and can preserve a fintech’s overall security posture. But how can this be achieved?

Introducing real-time targeted friction at user touch points can thwart both human and automated bot attacks. This friction causes cybercriminals to invest more time and money in their attacks. Ultimately, when a fraudster realizes that they won’t be able to profit as quickly – or easily – as they first envisioned, they will begin to realize that the attack is no longer worth the investment and call off the attack. This turns cybercriminals’ return on investment on its head and removes the financial incentive for their attack.

Arkose Labs secures financial institutions from cybercriminals

For fintechs and financial institutions looking to protect themselves from the many threats they face, there are many advanced solutions available. However, the right solution ensures that companies do not experience fraud-related reputational or financial loss. Arkose Labs understands the pressures security teams face and provides long-term account protection and fraud prevention—combined with continuous monitoring—that make attacks financially unsustainable for attackers while providing a secure, user-friendly experience for legitimate customers.

Arkose Labs’ platform uncovers the underlying intent of users – including risk scoring – before deploying the attack response. Targeted friction is inflicted on malicious users through Arkose MatchKey Challenges which vary in difficulty. This means that the more variables a cybercriminal has to take into account, the more difficult it is for them to automate their attack via bots. While these challenges put a stop to attackers and potential fraudulent transactions, legitimate users often experience no friction at all.

Arrange a meeting with us to learn how Arkose Labs can work with your business to prevent and reduce fraud, achieve long-term savings and improve ROI.

*** This is a Security Bloggers Network syndicated blog from Arkose Labs written by Steve James. Read the original post at: