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As consumer activities increased, fraudsters attempted to hide their transactions in the legions of legitimate banking. Combining all banking – internet, telephone, and branch – fraud attacks grew a whopping 159% in Q1 2021 compared to Q4 2020.
Feedzai, a data science company that prevents, detects, and remediates fraud risk for financial institutions, has just made public the outcomes of its latest financial crime report.
The report from Feedzai analyzes 12B worldwide transactions from January to March of 2021 in order to determine the newest fraud, banking, and consumer trends. Unfortunately, the top-line results are not very good.
Banking attacks have increased 159% over the past year and phone banking fraud has seen a 728% growth. Over 90% of fraud attacks happened online, and California seems to be the top state for fraud.
Account takeover was the principal strategy (42%) cybercriminals utilized to defraud financial institutions and their clients, followed by new account fraud (23%), impersonation (21%), purchase scams (15%), and phishing. Card-not-present (CNP) attacks accounted for 83% of all fraud attempts despite it making up just 18% of card transactions.
Coming out of lockdown, people began spending more money locally and internationally. Between January and March, the report saw a 410% growth in international purchases. Transaction volumes are increasing back to pre-pandemic levels, and fraud has followed close behind.
At the same time, increased dependence on digital services during the pandemic makes consumers more vulnerable to online and phone fraud, particularly those who previously preferred to shop in stores and may be less digitally shrewd.
Jaime Ferreira, Senior Director of Global Data Science at Feedzai stated:
The world may have paused in 2020, but financial criminals did not. Reliance on digital forms of shopping, banking, and payments actually made it easier for fraudsters to attack more people, more quickly. As fewer consumers feel the need to walk into a bank branch or a mall we need to adapt financial services and payments to protect consumers. And as consumers, we need to continue to be vigilant and educate ourselves on how to stay safe.
The report shows that banking is the primary channel for cybercriminals, whether online, in-person or by phone. With many financial institution divisions closed or functioning during limited hours during the pandemic, banking has moved primarily online and over the phone, the perfect sandboxes for scams.
After California, the states with the highest fraud were Florida, Washington, Arkansas, and New York. In England, the counties that experienced the most fraud were: Berkshire, Warwickshire, Buckinghamshire. Nottinghamshire, and Derbyshire.
While more and more people choose to buy from the comfort of their smartphones, Feedzai’s report discovered that Android users are more likely to face fraud. Of the total volume of bogus transactions, 34% were conducted on iOS, and 66% were attributed to Android.
The report suggests Apple’s tighter control of apps on the App Store makes it harder for fraudsters to penetrate the platform. Also, another cause might be Android’s open approach to support third-party app stores, which is beneficial for mobile malware.
“Consumers aren’t the only ones making moves, fraudsters are too,” the report said so we need to be vigilant in order to detect these kinds of scams and address them as soon as we do.
As a Senior Content Writer and Video Content Creator specializing in cybersecurity, I leverage digital media to unravel and clarify complex cybersecurity concepts and emerging trends. With my extensive knowledge in the field, I create content that engages a diverse audience, from cybersecurity novices to experienced experts. My approach is to create a nexus of understanding, taking technical security topics and transforming them into accessible, relatable knowledge for anyone interested in strengthening their security posture.
