Identity fraud rose to unprecedented levels in 2022, and experts are predicting that criminals will innovate even more in 2023. What did we learn in 2022 and what can we expect in 2023? In a recent FrankonFraud article, I joined fraud experts Frank McKenna and Karisse Hendrick to look back on the fraud trends that have dominated the headlines over the past 12 months and share our top predictions about what fraud trends will impact companies the most in 2023. Keep reading for the Cliffsnotes version or read Frank’s full article here.
Fraud Trends - A quick summary of what we saw in 2022
- A retro form of fraud called check fraud reared its ugly head again as the tail end of the pandemic and related stimulus programs prompted fraudsters to resurrect this illegal method of stealing checks out of the mail. Banks reported that check fraud doubled in 2022.
- Zelle fraud took center stage, with Senator Elizabeth Warren blasting banks for not doing enough to verify identities and protect customers.
- Scam names became just as horrifying as the scams themselves. Case in point: “Pig butchering”, which is a type of scam that involves a criminal “fattening up” their victim by convincing them to participate in investment schemes and finally taking all their money.
- Much of the “growth” we saw in recent times may have actually been fueled by bots and fake accounts.
- Tech stocks, real estate, NFTs, and crypto all seemed to crash at once, exposing an underbelly of fraud.
For a closer look into these 2022 findings, read Frank’s full blog post here.
Fraud Trends - 10 Predictions for 2023
1. Check fraud will jump to $24 Billion. Related to point #1 in the 2022 findings above, check fraud isn’t going anywhere and fraudsters will continue to milk this cash cow finally pushing banks to a breaking point.
2. Banks will invest more in fraud control as they feel the pressure to reimburse customers for scams
3. Some banks will be forced to turn off digital acquisition as a result of high attack rates
4. Massive coordinated fraud and cyber attacks will become the new normal
5. Merchants will be on the losing end of Visa’s new “compelling evidence” rules that greatly restrict a merchant’s ability to dispute cardholder/issuing bank claims of card fraud.
6. Account takeover, SIM swap fraud and refund fraud will be fueled by “insiders”, employees who work at telecom and retail companies
7. New breakthroughs in AI and machine learning will benefit fraud fighters - but also fraudsters too
8. Evidence - in the form of suspicious activity reports (or SARs) - is mounting, and all fingers point to a critical need for better identity verification to prevent identity fraud at the root of the problem
9. Fraud-related defaults could be up as much as 50% as recession and inflation loom
10. Passwordless authentication finally becomes a reality as new technologies enable companies to securely authenticate customers using alternative means
To close out these 2023 predictions, one additional point that you may have heard before but bears repeating is that just as fraudsters collaborate, fraud fighters must also band together to stand the best chance of defeating them. Many thanks to some of the most formidable fraud experts out there, Frank McKenna and Karisse Hendrick, for your continued collaboration and for teaming up with me to put together these predictions.
For the full scoop on all of these predictions, read Frank’s original article here.
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