Economic downturns often present new opportunities for fraudsters, making it more important than ever for online merchants to protect their businesses. As the economy contracts, we’re seeing an uptick in the following trends.
Rapidly Increasing Identity Theft
In a world of digital everything, identity theft has become increasingly common. And with consumers’ online presence continuing to grow, they’re more vulnerable than ever to data breaches. In 2022, NoFraud saw a 15% increase in identity theft, with the Internet Crime Report showing a nearly 50% increase in losses compared to the previous year, bringing the estimated total to $10.2 billion. Fraudsters are finding new ways to obtain and use personal information — and they’re scaling attempts for bigger cashouts.
This year, we expect to see identity theft increase due to cybercriminals gaining more access to consumer data. And with data breaches showing no sign of letting up, ecommerce businesses need to set effective prevention barriers to maintain frictionless experiences for customers.
Coordinated Fraud Attacks Will Emerge
A new method of fraud erupted in Q4 of last year: coordinated fraud attacks. This type of fraud can take many forms but is rooted in a group of fraudsters working together to target a handful of large online retailers at a time. Last year, ecommerce businesses reported losses in the tens of thousands of dollars and upward from coordinated fraud attacks. This year, we’re expecting a massive uptick in coordinated fraud attacks designed to exploit fraud defenses from all angles.
Increase in Triangulation Fraud
Last year saw a 70% increase in triangulation fraud with expectations of continued growth this year. Triangulation fraud involves the use of multiple parties to carry out a transaction. Oftentimes, fraudsters will create a fake online storefront with images and product descriptions stolen from a legitimate business. Products are promoted at a discount and once a customer makes a purchase, the fraudster contacts the legitimate retailer using stolen payment information to place an order for the same product.
With an uncertain economic landscape, shoppers are seeking more affordable options when shopping online. They will often turn to bargain sites or third-party marketplaces that are commonly used by triangulation fraud rings. Because of the ability to scale, this is a popular method used by coordinated attackers.
AI Introduces a New Fraud Era
While artificial intelligence (AI) has the potential to greatly benefit society, it has also introduced new opportunities for fraudsters to carry out sophisticated scams. ChatGPT and other forms of AI are used to easily and automatically find new victims for romance scams and unsuspecting fraud mules. Scammers will use ChatGPT to send near-perfect phishing emails, create better deep-fake images and videos, and create their own powerful bots.
As new opportunities arise for scammers, it’s more important than ever to have an effective solution for fraud prevention — one that carefully considers the customer experience. Merchants can focus on fraud prevention and avoid blocking legitimate orders. Stop fraud in its tracks without painful tradeoffs!
As the Chief Marketing Officer of NoFraud, Amy Frampton focuses on creating safe and seamless online shopping experiences for both merchants and shoppers, and bringing people and the brand together. Amy joined NoFraud in February 2023, bringing with her almost 20 years of marketing and leadership experience at several companies including BambooHR, Smartsheet, Microsoft, HPE, and Vulcan. She is a graduate of the University of Utah, with a BA in Political Science and Government.
