Unbelievably, UK’s fraudsters are showing no mercy since 2020. Customers, users & companies have become more vulnerable to the Financial fraud attacks, hacking, scams & con attacks. So, people need to stay updated with the latest knowledge on frauds and must be aware of the anti-fraud mechanisms that are trending in the year 2023.
In this article we shall talk about the frauds that are highly likely to continue attacking customers in the year 2023. In the conclusive part, we shall also give a few of the fraud prevention tips as general information.
Utility Scams
Utility scams are expected to become more prevalent in 2023 as consumers worry about energy costs. Scammers are taking advantage of this by sending fake messages claiming to help save money on bills and requesting personal information and payments. To prevent this, it is important for businesses and organizations to educate customers on how to recognize genuine communications and identify attempted fraud. Utilities companies are also implementing data-driven identity solutions to validate new client requests and verify the authenticity of existing customers, to ensure that all transactions and interactions with the organization are genuine.
Authorized Push Payment Fraud (APP)
Authorized Push Payment (APP) Fraud is a scam in which a victim is tricked into willingly making a bank transfer to a fraudster. According to UK Finance, APP fraud increased by 30% in the first half of 2022 compared to the same period in 2021. This trend is expected to continue in 2023 as fraudsters find new ways to defraud victims through fake emails, websites, and social media posts, and as stressed consumers become more vulnerable to promises of easy returns on investments. Within the APP fraud category, romance scams and "purchase scams" (in which consumers are conned into paying for fake goods) have seen particularly rapid growth. Crypto and investment-related scams are also contributing to the increase in APP fraud. To combat this trend, the UK's Payment Systems Regulator has introduced legislation making both paying and receiving banks responsible for related losses. In response to this risk, Experian expects to see major investments in solutions that use rich data and real-time analytics to detect and prevent potentially fraudulent customers and transactions.
Cluster fraud
Fraudsters have access to a large amount of personal information about consumers, obtained through oversharing on social media platforms or through data purchased on the dark web. This enables them to engage in "cluster fraud," in which a victim is targeted with multiple scams at once. For example, a victim may be presented with a fraudulent crypto investment opportunity by a scammer posing as a professional or personal contact, while also being targeted with a dating scam, a utility scam, or fake communications from a bank or financial institution. Research from Experian shows that losses from scams involving fake trading platforms have increased by 19% in the past year, and losses from crypto scams have risen by around 50%. This trend is expected to continue, with an additional increase of 30-40% in crypto scam losses predicted for 2023.
First Party Fraud
As the economic climate continues to affect the financial stability of UK consumers, there is expected to be an increase in 1st party mortgage, credit, and loan fraud in the coming year. Some consumers may be tempted to provide false or incomplete information about their financial situation in order to obtain a mortgage, consolidate credit card debt with a personal loan, or purchase a larger property. To protect against this risk, it is important for institutions to implement solutions that enable real-time, granular analysis of customers' income and expenses to identify discrepancies in consumer and business credit applications. This can help reduce the negative effects of 1st party fraud. It is also crucial for businesses to have the ability to continuously monitor and understand changing fraud risks across their portfolio, in order to identify and address first-party fraud, mule accounts, and other types of fraud and minimize risk and losses.
Also Read: Cybersecurity and KYC/AML
Instant Credit Issuing
In the past, credit card applications would take days or even weeks to be approved or denied, allowing institutions to conduct thorough customer checks. However, the emergence of credit products that provide near-instant access to funds requires real-time decision-making to reduce fraud risks. To mitigate these risks, retailers often advise consumers to make a few small purchases with their new credit line before buying more expensive items such as phones or tablets. Retailers and other service providers are also implementing data-driven solutions that can verify customers' identities and creditworthiness in real-time, enabling them to provide credit more quickly. To ensure compliance and minimize potential risks associated with instant credit issuance, a comprehensive and holistic view is necessary, including appropriate strong authentication checks, compliance with know your customer (KYC) requirements, and a balance between rapid onboarding processes and necessary risk assessments. These considerations should be applied to all types of "instant credit" products, including buy now pay later (BNPL) and virtual credit cards.
Digital Identity
The UK Government is promoting the use of digital ID solutions to improve the online experience and security, and to stimulate economic growth. Digital IDs will be crucial for online authentication, but they must be protected. The UK Government's Trust Framework requires consumers to prove their eligibility for various purposes, such as work, rental, and access to government services. An increasing number of online sites and services require authentication for onboarding or purchasing certain goods and services. To meet the demand for accurate, seamless online identity and authentication, reusable digital IDs are becoming more popular for accessing private and public sector services and for meeting eligibility requirements. However, the process of creating reusable digital IDs is still new to many consumers and there is some uncertainty surrounding it. The creation of digital IDs is expected to increase in both the public and private sectors in 2023, and it is important to establish a cybersecurity framework to protect them from potential exploitation by fraudsters.
Resource: Finextra Tips of Fraud Prevention 2023
Useful Fraud Prevention Tips 2023
Here we would like to discuss some of the fraud prevention tips that are predicted to be useful against the current prevailing frauds worldwide.
- Have sound, authentic & updated knowledge on frauds, phishing & social engineering attacks.
- Deploy a fraud monitoring & reporting system that is linked with your financial system.
- Stay updated about the traditional scams and how they have evolved.
- Do the manual review of reports & audits on a daily basis.
- Customers shall be informed and alerted for any suspicious activity.
- Use complex passwords.
- Use multiple verification and authentication while login for transactions.
- Keep the systems updated.
- Use paid antivirus & malware programs.
- Beware of internal fraud.
- OFAC checks are a good shield.
- Use the ReCAPTCHA authentication to avoid bot attacks.
- Don’t use public Wi-Fi.
- Use Encryption for lists of credentials
End word
Through these tips you can protect yourself from the ongoing frauds on an individual level. However , it is necessary to go professional and apply KYC procedures and also keep the Law enforcement in loop and report against any suspicious activity. Also, do not become greedy by any offer that sounds interesting or lucrative. That is when you are most vulnerable to fraud attacks and try to stay as low profile as you can in these dire times.
