2020 has been a challenging year for everyone, to say the least. But, as this year draws to a close, and we begin to see an end in sight for the COVID-19 pandemic, it’s finally time to begin looking toward the future.
2021 holds a lot of potential…but it could also bring new threats. Some trends in online fraud, for instance, are going to stick around and get even more pronounced in the new year. You’ve got to be prepared for what’s going to come, and learn how best to protect yourself.
With all that in mind, let’s take a look at some of the top fraud trends you need to know about heading into 2021.
#1. Authorized Push Payment Fraud
Credit rating agency Experian identified authorized push payment fraud (also known as “APP fraud” or simply “wire fraud”) as the top threat encountered by businesses in 2020. This scheme is expected to remain in that top tier of fraud threats in 2021 as well.
APP occurs when fraudsters trick their victims into authorizing payments from their own account into another account controlled by a criminal. These fraudsters can intercept messages, even alter consumers’ information, or even make up fake personas entirely. The goal for the fraudster is to trick their victims into authorizing payments to an account controlled by the fraudster.
APP fraud can be prevented by financial institutions that use real-time checks as a validation exercise. However, it’s also up to consumers to verify identities before sending money to anyone.
#2. Account Takeover
With these incidents, a fraudster manages to hack into a user’s account, then impersonate that customer. Criminals can do this as part of a phishing scheme, or the criminal might use some other means to find out your information. In either case, once the fraudster has access to your account, they are able to conduct transactions and other activity on your behalf.
One way to protect yourself here is to use two-factor authentication (2FA) when available. This means using a strong and secure password on all accounts, along with some other form of identification. Biometrics, for example, are a great option when available. Payment tools like Apple Pay and Samsung Pay allow you to require a biometric signature, like a thumbprint, to authorize purchases.
#3. New Account Fraud
This scheme, a form of identity fraud, occurs when criminals use stolen information to create a new account. The fraudster may impersonate a real person using information acquired through phishing or through some other method of hacking a user’s data.
With the new account, fraudsters are able to take out lines of credit, make purchases, and conduct other business using a stolen identity (or multiple identities). This is not a new tactic; however, we anticipate that it will continue to grow rapidly as more consumers make purchases and do other business online.
You can defend against this tactic by keeping your information secure. Again, we recommend using strong, secure, and unique passwords for all your accounts. Also, educate yourself about the risk posed by phishing tactics.
#4. Synthetic Identity Fraud
Unlike other tactics, which involve a fraudster impersonating a real person, synthetic identity fraud occurs when a criminal uses different pieces of information to create a fake identity. This fake person can have a Social Security number from one individual, a name and date of birth from another, and billing information from another.
This is an advanced and complex threat, and it continues to be more of a problem with each passing year. When well-executed, it’s extremely difficult for businesses to identify these schemes, which will only make them more popular over time.
While the use of the data is different, the tactics used to steal the data are no different from any other identity theft. Like account takeover or new account fraud, you can protect against synthetic identity fraud by ensuring that you stick to best practices to avoid phishing and other similar schemes.
#5. Friendly Fraud
Unlike other tactics, friendly fraud is perpetrated by cardholders, rather than against them. This scheme refers to abuse—either deliberate or accidental—of the chargeback process.
Chargebacks are an important form of consumer protection. They allow buyers to claw back their funds in the event of fraud. However, more and more cardholders are using them as a tool to effectively “get something for free.” This has consequences for businesses, but it can negatively affect cardholders, too. If you get caught requesting unjustified chargebacks, it could result in penalties from your bank. The could even cancel your account, which may negatively affect your credit score.
If you believe someone made an unauthorized purchase on your account: don’t panic. Be sure you investigate the situation fully. You don’t want to file a chargeback on a transaction you authorized, then forgot about, or don’t recognize at first glance.
If you believe you’ve truly been the victim of fraud, try contacting eConsumer Services. Our team of talented risk management experts can help you recover your funds, and prevent future fraud incidents.