[REPORT] How Spam and Scams Mobilize the Fraud Economy
Content-driven attacks fuel the Fraud Economy, giving fraudsters a platform to use digital content as a disguise for fake information, financial fraud, and phishing attacks. Transpiring on forums, marketplaces, social media channels, and all across the web, cybercriminals launch spam and scam attacks to trick consumers into sharing sensitive information—later sold or used to steal rewards, store credit, or cash.
But the lack of oversight on these platforms leaves consumers—and businesses—susceptible to attack. In fact, data from our global network reveals that scams made up nearly 60% of the abuse content blocked by Sift during the first quarter of 2021. And the average rate of fraudulent content blocked by Sift spiked dramatically between Q1 2019 and Q1 2020, increasing by 77% and then by another 18% in just the first quarter of 2021.
To better understand how content-driven attacks move the Fraud Economy forward, our Data Science team has dug into new online data, uncovering fraud trends and delivering expert insights. The findings in our latest Digital Trust & Safety Index are derived from Sift’s global data network representing over 34,000 sites and apps using Sift, as well as responses from 1,200+ consumers surveyed in May 2021.
Rising content fraud costs consumer trust
Content block rates have yet to dip back down to pre-pandemic levels, showing that content fraud is as prevalent as ever—and growing. And with many businesses relying solely on users to flag spam and suspicious messages on their platforms, fraudsters can more easily slip under the radar and result in financial losses for the company. In fact, the uptick in scammy content has a big impact on how consumers view brands—new research found that trust in a brand is the primary driving factor behind where people choose to shop. More than half of consumers would stop shopping at a business and leave for a rival merchant if they discovered fake or misleading content on a brand’s website.
This low tolerance for suspicious content should be a wake-up call for businesses, illustrating the true cost of even just one successful scam on a merchant’s website—lost sales combined with deterred shoppers’ CAC (customer acquisition costs), LTV (lifetime value), and chargebacks resulting from any payment fraud resulting from the scam.
But according to survey results, some industries are larger targets for spam and scams than others. In the graphic below, you can see that the majority of consumers (61%) report encountering the most spam and scams on social media sites, followed by classifieds, dating sites, marketplaces, and crowdfunding sites. This poses a risk not only to consumers and the sites themselves, but other merchants whose ads on these platforms may be compromised by copycat fraudsters.
Fraudsters exploit COVID-19
During a recent interview with Sift, ex-fraudster and risk expert Alexander Hall explained how “COVID-19 presented the perfect storm for fraud, leading e-commerce merchants to shift in ways that, unfortunately, fuel more sophisticated and widespread online fraud attacks.”
The pandemic forced many merchants to rapidly transform how they did business, rushing to implement contactless delivery, BOPIS/BORIS (buy online, pickup/return in store) experiences, and alternative digital payments. Unfortunately, this rapid innovation left businesses open to exploitation. Hall warns that fraudsters look for ways to work around COVID-inspired operational changes by finding loopholes and natural opportunities to commit fraud and get by undetected.
In order for merchants to combat this fraud, trust and safety teams will need to stay aware of how pandemic-era market fluctuations impact the Fraud Economy and shine a light on business vulnerabilities. With an end-to-end solution, merchants can monitor all types of attacks, stop them before they happen, and prioritize growth.
