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Rapidly evolving technology has fueled fraud by making it easier for cybercriminals to collaborate and share information, but it’s also made fraud more accessible to the everyday internet user. Below, our Trust and Safety Architects at Sift share their expertise on these emerging fraud trends—read on to learn about the latest payment fraud findings and industry insights, tips for recession-proofing your fraud strategy, and Sift’s newest product enhancements in our Digital Trust & Safety roundup.
Sift released its first Digital Trust & Safety Index of the year, highlighting growing payment fraud attacks in fintech, which saw a 13% rise between 2021 and 2022. Within the fintech sector, buy now, pay later (BNPL) saw a massive 211% surge in payment fraud, followed by crypto exchanges, which experienced a 45% jump. Even more alarming, a surprising number of surveyed consumers have encountered offers to commit payment fraud, with some admitting to having participated themselves or knowing someone who has.
These findings align with the increasing ease with which anyone can find the tools or tactics to commit fraud online, creating a democratization of fraud, as the barriers to access are lowered. Fueling this phenomenon is the emergence of fraud-as-a-service (FaaS), where fraudsters market and sell their services on the deep and dark web.
“The rapid democratization of fraud presents even more opportunities for motivated criminals to expand their reach by ‘productizing’ their offerings and selling their services to commit fraud against businesses,” Jane Lee, Trust and Safety Architect at Sift, explained in the Fintech Times. “As online fraud continues seeping into everyday internet culture, trust and safety operations have become the single point of failure or success for businesses.”
Jane Lee shares more insights on the latest findings in the Paypers.
The economic outlook for the remainder of this year remains shaky, as consumers continue to experience rising costs, and the threat of a recession still looms. We know from past economic downturns that this type of environment is a breeding ground for fraud, with cybercriminals targeting both businesses and consumers. Merchants that don’t prepare for this likely spike in cybercrime can expect to face increased losses due to fraud and chargeback abuse.
Recently, Brittany Allen, Trust and Safety Architect at Sift, sat down with Digital Transactions to share the fraud lessons learned in 2022 and how merchants can prepare to minimize the impact on fraud in challenging times. Watch the full webinar.
The Sift team was excited to exhibit and present at MRC Vegas 2023, the leading conference for payments and fraud prevention industry professionals to network and share ideas. In addition to presenting a ‘Fraud 201’ workshop and a session on how marketplaces combat collusion fraud, the Sift team had the opportunity to hear from a diverse group of speakers and engage with industry peers about this year’s key fraud challenges and trends.
One concern that emerged frequently was the rising rates of first-party fraud (friendly fraud), with the MRC reporting that 34% of merchants have experienced this type of fraud, amounting to an estimated $35 in additional costs for every $100 in disputes. These findings underscore Sift’s recent consumer survey results, which found that 23% of respondents who have disputed a purchase claimed fraud as the reason, even when they had received the item or service and were satisfied with it. It’s reasonable to believe that the number of consumers committing first-party fraud is likely an undercount, as consumers are hesitant to admit to friendly fraud when asked.
Kevin Lee, VP of Trust and Safety at Sift, shares more key takeaways from the conference in our latest blog.
As fraud threats grow more pervasive and complex, having a set of tools and strategies to effectively respond to both existing and emerging fraud is essential if businesses are to keep up. Sift’s newest product release—Workflow Backtesting and Percentile Scoring—allows fraud teams to have more control over their fraud prevention strategies and improved insights on changing fraud risks. With Workflow Backtesting, risk teams can run historical data through a new workflow to see how it would perform before it goes live. And Percentile Scoring allows teams to make more accurate risk assessments and adjust their fraud operations in real time if needed.
“Today’s fraud teams are navigating volatile fraud spikes and defending against the most advanced cybercriminals, all while working to maintain smooth and secure online experiences for their customers,” said Mary Writz, SVP of Product at Sift. “The current fraud landscape requires that businesses have intuitive, reliable ways to make real-time adjustments to fraud operations so they can be both reactive and proactive in their fight against fraud. Sift’s new platform capabilities help risk teams achieve these goals—by empowering our customers to take control of their fraud prevention strategy to best suit their unique business needs.”
Read more about Sift’s new product features in this blog by Sift’s Senior Product Marketing Manager, Jimmy Dunn.
Explore the newest payment fraud data and fraud trends in Sift’s Digital Trust & Safety Index.
Stop fraud, break down data silos, and lower friction with Sift.