Tag: cryptocurrency

Cryptocurrency scams are on the rise as digital currencies gain popularity. The decentralized nature of these currencies makes them equally attractive to both legitimate consumers and fraudsters. Businesses may find themselves in a difficult position as they seek to prevent cryptocurrency-related fraud and help protect consumers. What are cryptocurrency scams? Cryptocurrencies are virtual currencies often based on and secured by blockchain technology. However, this does not always translate into security for the individual consumer. Many individuals fall victim to either cryptocurrency investment scams or cryptocurrency theft. Cryptocurrencies are not yet well-regulated or backed by a sovereign entity, leaving consumers open to threats when purchasing funds. The deregulated nature of the currencies makes it easy for scammers to build what appear to be legitimate cryptocurrency projects before disappearing, similar to pump-and-dump stock schemes. Additionally, scammers will perpetrate romance or other relationship-based scams and convince the victim to send them funds in cryptocurrency form. Cryptocurrency theft follows a few traditional fraud patterns: The fraudster may use phishing or social engineering to steal credentials. A crime ring might leverage malware or keystroke loggers to do the same thing. A scammer might present a “reward” to an unsuspecting consumer and require access to their wallet in order to “gift” the reward. Scammers consistently find new ways to trick unsuspecting consumers, including a recent scam relying on QR codes to steal funds converted to cryptocurrency via an ATM. Other common scams utilize imposter websites, fake mobile apps, bad tweets, or scamming emails to steal information and funds. The impact of scams on consumers According to the FTC, investment cryptocurrency scam reports have skyrocketed, with nearly 7,000 people reporting losses totaling more than $80 million from October 2020 to March 2021, with a media loss of $1,900. In 2020 the Better Business Bureau Scam Tracker Risk Report ranked cryptocurrency scams as the seventh riskiest. In 2021, they jumped to the second riskiest scam. In Michigan alone 31 cryptocurrency scams were reported from January 2020 to March 2022, with reported loses from $350 all the way to $41,000. The impact of scams on businesses While the true impact of cryptocurrency scams on businesses is hard to measure, it’s easy to identify several areas for concern. First is the opportunity for the theft of personally identifiable information (PII) during a fraudulent cryptocurrency transaction. Once fraudsters have stolen funds, they may also funnel them through a legitimate business and turn them into a regulated form of currency for easy of use. Businesses with legitimate cryptocurrency interactions may also suffer from spoofed apps or websites, causing reputational damage when consumers are taken in by a scam. Preventing the fallout from scams As companies debate accepting cryptocurrency as a form of payment, it’s important to consider that funds may be stolen or accessed by a malicious party. One way to protect your organization is to have a strong device identification strategy that can help ensure the entity accessing an account and the funds within is the true owner. By layering in this protection with other fraud defenses, businesses can be better prepared as consumer payment preferences shift. Additionally, financial institutions and other organizations should keep consumers informed about how to protect their own data and signs of scams. To learn more about how Experian is helping businesses develop and maintain effective fraud and identity solutions, visit us or request a call. And keep an eye out for additional in-depth explorations of our Future of Fraud Forecast. Request a call Future of Fraud Forecast

With consumers continuing to take a digital-first approach to everything from shopping to dating and investing, fraudsters are finding new and innovative ways to commit fraud. To help businesses anticipate and prepare for the road ahead, we created the 2022 Future of Fraud Forecast. Here are the fraud trends we expect to see over the coming year: Buy Now, Pay Never: Buy now, pay later lenders will see an uptick in identity theft and synthetic identity fraud. Beware of Cryptocurrency Scams: Fraudsters will set up cryptocurrency accounts to extract, store and funnel stolen funds, such as the billions of stimulus dollars swindled by criminals. Double the Trouble for Ransomware Attacks: Fraudsters will not only ask for a hefty ransom to cede control back to the companies they’ve hacked but also steal and leverage data from the hacked company. Love, Actually?: Romance scams will continue to see an uptick, with fraudsters asking victims for money or loans to cover fabricated travel costs, medical expenses and more. Digital Elder Abuse Will Rise: Older consumers and other vulnerable digital newbies will be hit with social engineering and account takeover fraud. “Businesses and consumers need to be aware of the creativity and agility that fraudsters are using today, especially in our digital-first world,” said Kathleen Peters, Chief Innovation Officer at Experian Decision Analytics in North America. “Experian continues to leverage data and advanced analytics to develop innovative solutions to help businesses prevent fraudulent behavior and protect consumers.” To learn more about how to protect your business and customers from rising fraud trends, download the Future of Fraud Forecast and check out Experian’s fraud prevention solutions. Future of Fraud Forecast Read Press Release

Perhaps more than ever before, technology is changing how companies operate, produce and deliver products and services to their customers. Similarly, technology is also driving a shift in customer expectation in how, when and where they consume products and services. But these changes aren’t just relegated to the arenas where tech giants with household names, like Amazon and Google, play. Likewise, financial institutions of every size are also fielding the changes brought on by innovations to the industry in recent years. According to this report by PWC, 77% of firms plan on dedicating time and budgets to increase innovation. But what areas make the most sense for your business? With a seemingly constant shift in consumer and corporate focus, it can be difficult to know which technological advancements are imperative to your company’s success and which are just the latest fizzling buzzword. As you evaluate innovation investments for your organization in 2019 and beyond, here’s a list of four technology innovations that are already changing the financial sector or will change the banking landscape in the near future. The APIs of Open Banking Ok, it’s not a singular innovation, so I’m cheating a bit here, but it’s a great place to begin the conversation because it comprises and sets the stage for many of the innovations and technologies that are in use today or will be implemented in the future. Created in 2015, the Open Banking Standard defined how a bank’s system data or consumer-permissioned financial data should be created, accessed and shared through the use of application programming interfaces or APIs. When financial institutions open their systems up to third-party developer partners, they can respond to the global trends driving change within the industry while greatly improving the customer experience. With the ability to securely share their financial data with other lenders, greater transparency into the banking process, and more opportunities to compare product offerings, consumers get the frictionless experience they’ve come to expect in just about every aspect of life – just not necessarily one that lenders are known for. But the benefits of open banking are not solely consumer-centric. Financial institutions are able to digitize their product offerings and thus expand their market and more easily share data with partners, all while meeting clients’ individualized needs in the most cost-effective way. Biometrically speaking…and smiling Verifying the identity of a customer is perhaps one of the most fundamental elements to a financial transaction. This ‘Know Your Customer’ (KYC) process is integral to preventing fraud, identity theft, money laundering, etc., but it’s also time-consuming and inconvenient to customers. Technology is changing that. From thumbprint and, now, facial recognition through Apple Pay, consumers have been using biometrics to engage with and authorize financial transactions for some time now. As such, the use of biometrics to authenticate identity and remove friction from the financial process is becoming more mainstream, moving from smartphones to more direct interaction. Chase has now implemented voice biometrics to verify a consumer’s identity in customer service situations, allowing the company to more quickly meet a customer’s needs. Meanwhile, in the US and Europe, Visa is testing biometric credit cards that have a fingerprint reader embedded in the card that stores his or her fingerprint in order to authenticate their identity during a financial transaction. In China, companies like Alipay are taking this to the next level by allowing customers to bypass the phone entirely with its ‘pay with a smile’ service. First launched in KFC restaurants in China, the service  is now being offered at hospitals as well. How, when and where a consumer accesses their financial institution data actually creates a digital fingerprint that can be verified. While facial and vocal matching are key components to identity verification and protecting the consumer, behavioral biometrics have also become an important part of the fraud prevention arsenal for many financial institutions. These are key components of Experian’s CrossCore solution, the first open fraud and identity platform partners with a variety of companies, through open APIs discussed above. Not so New Kid on the Block(chain) The first Bitcoin transaction took place on January 12, 2009. And for a number of years, all was quiet. Then in 2017, Bitcoin started to blow up, creating a scene reminiscent of the 1850s California gold rush. Growing at a seemingly exponential rate, the cryptocurrency topped out at a per unit price of more than $20,000. By design cryptocurrencies are decentralized, meaning they are not controlled or regulated by a single entity, reducing the need for central third-party institutions, i.e. banks and other financial institutions to function as central authorities of trust. Volatility and regulation aside, it’s understandable why financial institutions were uneasy, if not skeptical of the innovation. But perhaps the most unique characteristic of cryptocurrencies is the technology on which they are built: blockchain. Essentially, a blockchain is just a special kind of database. The database stores, validates, transfers and keeps a ledger of transfers of encrypted data—records of financial transfers in the case of Bitcoin. But these records aren’t stored on one computer as is the case with traditional databases. Blockchain leverages a distributed ledger or distributed trust approach where a full copy of the database is stored across many distributed processing nodes and the system is constantly checking and validating the contents of the database. But a blockchain can store any type of data, making it useful in a wide variety of applications including tracking the ownership digital or physical assets or the provenance of documents, etc. From clearing and settlements, payments, trade finance, identity and fraud prevention, we’re already seeing financial institutions explore and/or utilize the technology. Santander was the first UK bank to utilize blockchain for their international payments app One Pay FX. Similarly, other banks and industry groups are forming consortiums to test the technology for other various uses. With all this activity, it’s clear that blockchain will become an integral part of financial institutions technology and operations on some level in the coming years. Robot Uprising Rise in Robots While Artificial Intelligence seems to have only recently crept into pop-culture and business vernacular, it was actually coined in 1956 by John McCarthy, a researcher at Dartmouth who thought that any aspect of learning or intelligence could essentially be taught to a machine. AI allows machines to learn from experience, adjust to new inputs and carry out human-like tasks. It’s the result of becoming ‘human-like’ or the potential to become superior to humans that creeps out people like my father, and also worries others like Elon Musk. Doomsday scenarios a la Terminator aside, it’s easy to see how the tech can and is useful to society. In fact, much of the AI development done today uses human-style reasoning as a model, but not necessarily the ultimate aim, to deliver better products and services. It’s this subset of AI, machine learning, that allows companies like Amazon to provide everything from services like automatic encryption in AWS to products like Amazon Echo. While it’s much more complex, a simple way to think about AI is that it functions like billions of conditional if-then-else statements working in a random, varied environment typically towards a set goal. Whereas in the past, programmers would have to code these statements and input reference data themselves, machine learning systems learn, modify and map between inputs and outputs to create new actions based on their learning. It works by combining the large amounts of data created on a daily basis with fast, iterative processing and intelligent algorithms, allowing the program to learn from patterns in the data and make decisions. It’s this type of machine learning that banks are already using to automate routine, rule-based tasks like fraud monitoring and also drive the analytical environments used in their risk modeling and other predictive analytics. Whether or not you’ve implemented AI, machine learning or bot technology into your operations, it’s highly likely your customers are already leveraging AI in their home lives, with smart home devices like Amazon Echo and Google Home. Conversational AI is the next juncture in how people interface with each other, companies and life in general. We’re already seeing previews of what’s possible with technologies like Google Duplex. This has huge implication for the financial services industry, from removing friction at a transaction level to creating a stickier, more engaging customer experience. To that end, according to this report from Accenture, AI may begin to provide in-the-moment, holistic financial advice that is in a customer’s best interest.   It goes without saying that the market will continue to evolve, competition will only grow more fierce, consumer expectation will continue to shift, and regulation will likely become more complex. It’s clear technology can be a mitigating factor, even a competitive differentiator, with these changing industry variables. Financial institutions must evolve corporate mindsets in their approach to prioritize innovations that will have the greatest enterprise-wide impact. By putting together an intelligent mix of people, process, and the right technology, financial institutions can better predict consumer need and expectation while modernizing their business models.