The dark side of the digital economy

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The dark side of the digital economy

In 2021, the Association of Certified Anti-Money Laundering Professionals issued a report predicting that cybercrime losses would reach US$6 trillion by the end of that year. It tripled fee revenue and made cybercrime more profitable than the global illicit drug market.

Fraud rediscovered

Rapid technological evolution and the emergence of advanced tools such as artificial intelligence and machine learning provide fraudsters with new opportunities. They use these technologies to commit fraud through social engineering, creating fake identities, and other sophisticated tactics.

The integration of artificial intelligence into the fraud landscape is particularly noteworthy. While this has few benefits, it allows users to create “deepfake” visuals and audio that accurately mimic humans, create artificial identities to impersonate bank officials or executives, and authorize fraudulent transactions for large sums of money. In addition, AI is commonly used in instant payment fraud, where the victim believes they are communicating with a trusted person who prompts them to transfer money to an account controlled by the fraudster.

The Federal Trade Commission has identified social media as a channel used by criminals, with one in four people reporting being a victim of fraud since 2021. Additionally, “friendship fraud,” in which a customer makes an online purchase and later falsely claims they did not receive the product or authorized the transaction and requests a refund, accounts for a large portion of e-commerce losses. According to the MPC, this type of fraud is expected to reach more than $100 billion in payments this year.

Strategies for winning the digital war against fraud

Financial institutions and payment service providers are aware of the challenge of staying one step ahead of fraudsters, which is why they are increasingly investing in advanced risk management and e-commerce solutions. According to the guide “Anatomy of the New Scammer 2024″, recently released by the BPC, states that the best way to combat fraud is to implement technologies such as two-factor authentication (ADF). Strengthening KYC and KYB procedures and use of biometrics are other examples.

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While some financial services firms choose on-premise solutions to gain more control over the enterprise, the rapid evolution of fraud and the imperative to keep databases, detection methods and rules up-to-date in real-time is driving the popularity of SaaS. solutions. According to a Forrester report, more than 50% of financial services and insurance companies plan to increase their investment in SaaS solutions in the future.

The SaaS model is critical to fraud prevention, allows companies to keep up with technological evolution and quickly update their security systems. By removing the burden of developing and maintaining proprietary software, advanced fraud detection solutions simplify implementation. Additionally, its flexibility and accessibility simplify infrastructure, strengthen transaction security and ensure business continuity in a dynamic digital environment.

The fight against fraud is a never-ending story. As fraudsters perfect their criminal schemes using technological advances and new communication channels, implementing smart and innovative fraud prevention and risk management programs must keep pace. It is essential for all parties involved in the online payment business to protect users and merchants, mitigate financial losses and prevent reputational damage.

Despite significant progress in reducing fraud, it is clear that we must continue to innovate, maintain awareness and foster cooperation to achieve a completely secure financial environment.

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