Online fraud is constantly evolving, but that doesn’t always mean fraudsters are abandoning tried-and-true fraud methods for brand new tactics. More often than not, aided by new technologies and communication channels, they simply improve and scale their scams, or tweak them to adapt to new situations, like this crypto version of the classic cashout scam. Read on to catch up on the latest fraud-related news—from rising rates of fraudulent chargebacks to new dangers lurking on social media—and learn about an exciting milestone reached by Sift.
Rising chargebacks felt by fintech
Managing chargebacks is a time-consuming hassle for merchants, but new data from Sift indicates they’re costing businesses more (both in terms of time and money) every year. Recent Sift data points to a 35% increase in chargebacks in 2022, with fintech taking a hard hit. The average value of a disputed item jumped 16% as well. These costs add up in the short term, but unchecked disputes can also have a longer-lasting negative effect on businesses.
“An often unrecognized impact of chargebacks is customer loyalty. Many businesses don’t realize how much chargebacks can break the trust they’ve built with their customers—83% of whom say they’d be less willing to buy a product or service from a company if they had to file a dispute due to a fraudulent purchase on their account,” explains Sift Trust and Safety Architect Brittany Allen.
Read more about what businesses can do to stay ahead of rising disputes in Finextra.
Fighting back against ATO
According to Identity Theft Resource Center’s 2022 Annual Data Breach Report, 422.1 million people in the United States had their credentials exposed in data breaches, an increase of almost 41.5% from 2021. This is good news for cybercriminals, who not only use this exposed data to commit account takeovers (ATO), but also sell it on the deep and dark web, making it easier for both seasoned and novice fraudsters to access stolen information.
“Whether it’s Telegram or WhatsApp, all this information is pretty readily available,” says Kevin Lee, Sift’s VP of Trust and Safety.
Kevin recently sat down with the Fraud Practice to discuss how easily fraudsters can access user account information, enabling the rising rates of ATO, and how businesses can use dynamic friction to mitigate takeovers without sacrificing the legitimate user experience.
Watch the full webinar.
Social media’s scam problem
Scams seem to be everywhere these days, whether it’s on dating sites where fraudsters use romance to swindle unsuspecting daters, or countless versions of social engineering schemes via email or text. It’s social media, however, where scams really flourish, with 65% of consumers reporting that social networking sites are among the spammiest and scammiest places online.
In light of these findings, Meta’s recent announcement of its new paid account verification option may be intended in part to prevent impersonation scams, but Sift Trust and Safety Architect Brittany Allen warns this new feature has the potential to increase fraudulent activity across platforms.
“As some users opt to pay for verified accounts, fraudsters will see an opportunity to take advantage of the change, and scammers are likely to increase phishing attempts to take over verified accounts,” explains Allen.
Read more in Reader’s Digest.
Sift’s global data network grows
As fraud becomes easier to execute and increasingly accessible to both established fraudsters and fraud-curious consumers, growing into a full-scale Fraud Economy, risk teams need to rely on vast amounts of information to be able to react quickly to detect and prevent attacks.
That’s why Sift is proud to announce that its global data network, which powers its machine learning models, is stronger than ever—now processing over 1 trillion (1T) events per year.
“Across 34k+ sites and apps worldwide, Sift ingests more than one trillion events per year, which are categorized into 16k different signals of potentially fraudulent activity. This means our network is able to detect new attack patterns within 250 milliseconds, providing customers across the Sift network with near-instant protection.” – Mary Writz, Sift SVP of Product
Read more about what this milestone means for Sift’s customers.