Introduction
Technology has been advancing rapidly ever since the concept of AI came along. While technological advancements have been a blessing to many sectors, including Finance, they also come with certain risks. These risks revolve around financial fraud, involving individuals and businesses as its victims. In 2023, consumers reported losing more than $10 billion to fraud. This represents a 14% increase over such reported losses in 2022. This underscores the need for secure payment processing through secure payment gateways and trusted payment solutions.
This article will cover the top emerging financial fraud trends of 2024 that every business must be vigilant about, along with some tips to avoid becoming a victim of such fraud.
Card-Not-Present Fraud
Card-not-present fraud, aka CNP fraud, occurs when criminals make purchases using stolen credit card information without physically presenting the card to the merchant. Since the physical card is not presented, it mainly happens through online transactions, phone orders, or other remote channels.
Data, Intellectual Property and Identity Theft
As technology advances, the value of data increases. Many businesses handle sensitive information, be it personal data or intellectual property. If personal data gets leaked, it can lead to severe loss for the individuals affected and even result in loss of reputation for the firm. On the other hand, intellectual property theft can gravely damage your business itself if an employee leaks your patents and trade secrets to your competitors.
Account Takeover
It is another type of identity theft, but the difference is that the fraudster takes control of the existing account and pretends to be the real user. Some signs to spot an account takeover include unusual password change requests and an unknown device visible on your account. This primarily happens through phishing. Now, let us understand what phishing is.
Phishing and Social Engineering
Phishing and social engineering are not different topics. Instead, phishing is a type of fraud that involves the concept of social engineering. Here, the scammers use fraudulent practices to trick people into sharing sensitive information. This includes sending messages or emails with malware links to hack the victim’s system and steal valuable data, such as login credentials, account details, etc.
Payment Card Skimming
Phishing and social engineering are not different topics. Instead, phishing is a type of fraud that involves the concept of social engineering. Here, the scammers use fraudulent practices to trick people into sharing sensitive information. This includes sending messages or emails with malware links to hack the victim’s system and steal valuable data, such as login credentials, account details, etc.
Payment Card Skimming
Payment card skimming is a method of obtaining critical personal data, such as your ATM PIN while using an ATM. The concept behind this fraud is that a skimmer (fake device) is installed right on the ATM card slot. When you swipe your credit or debit card and enter your PIN, the skimmer saves all those details, which scammers can take advantage of later.
Man-in-the-Middle Attack
A man-in-the-middle attack involves a third person intercepting two people’s transactions with the intention of eavesdropping on or impersonating one of the parties to siphon money from the other party.
Account Origination Fraud
Account origination fraud can be considered one of the next steps in phishing. Once the scammers have the victim’s key bank details, they can even use them to open fake bank accounts and commit fraud on a larger scale directly with the financial institution. It is a cybercrime, meaning no physical appearance takes place.
Financial Fraud Protection Tips
Now that we know the prime types of financial fraud, understanding how to tackle them and safeguard our established business is equally important. You can ensure the same through the following:
Implement strong internal controls to limit access to financial data and prevent unauthorized access to financial systems and sensitive data. Opt for encrypted payment systems to best exhibit limited access.
Conduct regular audits to keep the financials in check and hire an external auditor to assess your financials annually.
Promote your workforce to flag fraud immediately. Fraud reporting should be an important part of the company culture.Create strict anti-fraud, anti-bribery, and corruption policies and implement them on employees who violate the agreement through fraud. Opt for anti-fraud payment solutions to further impact fraud and bribery.
Conclusion
With technology, business has become easier than before. However, it comes with certain setbacks that need to be considered before you move forward. Not paying attention to these situations can lead to both financial and reputational losses for your company. In this situation, Omnipayments comes as a savior, providing a complete set of affordable payment solutions that are acquired, authenticated, routed, switched, and authorized across multi-functional payment solutions, such as POS terminals, ATMs, IVRs, kiosks, and the Internet. Book a call with us to learn more.
