Tag: fraud management

While bots have many helpful purposes, they have unfortunately become a tool for malicious actors to gain fraudulent access to financial accounts, personal information and even company-wide systems. Almost every business that has an online presence will have to face and counter bot attacks. In fact, a recent study found that across the internet on a global scale, malicious bots account for 30 percent of automated internet activity.1 And these bots are becoming more sophisticated and harder to detect. What is a bot attack and bot fraud? Bots are automated software applications that carry out repetitive instructions mimicking human behavior.2 They can be either malicious or helpful, depending on their code.  For example, they might be used by companies to collect data analytics, scan websites to help you find the best discounts or chat with website visitors. These "good" bots help companies run more efficiently, freeing up employee resources. But on the flip side, if used maliciously, bots can commit attacks and fraudulent acts on an automated basis. These might even go undetected until significant damage is done. Common types of bot attacks and frauds that you might encounter include: Spam bots and malware bots: Spam bots come in all shapes and sizes. Some might scrape email addresses to entice recipients into clicking on a phishing email. Others operate on social media sites. They might create fake Facebook celebrity profiles to entice people to click on phishing links. Sometimes entire bot "farms" will even interact with each other to make a topic or page appear more legitimate. Often, these spam bots work in conjunction with malware bots that trick people into downloading malicious files so they can gain access to their systems. They may distribute viruses, ransomware, spyware or other malicious files.  Content scraping bots: These bots automatically scrape content from websites. They might do so to steal contact information or product details or scrape entire articles so they can post duplicate stories on spam websites.  DDoS bots and click fraud bots: Distributed denial of service (DDoS) bots interact with a target website or application in such large numbers that the target can't handle all the traffic and is overwhelmed. A similar approach involves using bots to click on ads or sponsored links thousands of times, draining advertisers' budgets.  Credential stealing bots: These bots use stolen usernames and passwords to try to log into accounts and steal personal and financial information. Other bots may try brute force password cracking to find one combination that works so they can gain unauthorized access to the account. Once the bot learns consumer’s legitimate username and password combination on one website, they can oftentimes use it to perform account takeovers on other websites. In fact, 15 percent of all login attempts across industries in 2022 were account takeover attacks.1 AI-generated bots: While AI, like ChatGPT, is vastly improving the technological landscape, it's also providing a new avenue for bots.3 AI can create audio and videos that appear so real that people might think they're a celebrity seeking funds.  What are the impacts of bot attacks? Bot attacks and bot fraud can have a significant negative impact, both at an individual user level and a company level. Individuals might lose money if they're tricked into sending money to a fake account, or they might click on a phishing link and unwittingly give a malicious actor access to their accounts. On a company level, the impact of a bot attack can be even more widespread. Sensitive customer data might get exposed if the company falls victim to a malware attack. This can open the door for the creation of fake accounts that drain a company's money. For example, a phishing email might lead to demand deposit account (DDA) fraud, where a scammer opens a fraudulent account in a customer's name and then links it to new accounts, like new lines of credit. Malware attacks can also cause clients to lose trust in the company and take their business elsewhere.A DDoS attack can take down an entire website or application, leading to a loss of clients and money. A bot that attacks APIs can exploit design flaws to steal sensitive data. In some cases, ransomware attacks can take over entire systems and render them unusable.  How can you stop bot attacks? With so much at risk, stopping bot attacks is vital. But some of the most typical defenses have core flaws. Common methods for stopping bot attacks include:  CAPTCHAs: While CAPTCHAs can protect online systems from bot incursions, they can also create friction with the user process. Firewalls: To stop DDoS attacks, companies might reduce attack points by utilizing firewalls or restricting direct traffic to sensitive infrastructures like databases.4 Blocklists: These can prevent IPs associated with attacks from accessing your system entirely. Multifactor authentication (MFA): MFA requires two forms of identification or more before granting access to an account. Password protection: Password managers can ensure employees use strong passwords that are different for each access point.  While the above methods can help, many simply aren't enough, especially for larger companies with many points of potential attacks. A piecemeal approach can also lead to friction on the user's side that may turn potential clients away. Our 2024 Identity and Fraud Report revealed that up to 38 percent of U.S. adults stopped creating a new account because of the friction they encountered during the onboarding process. And often, this friction is in place to try to stop fraudulent access. Incorporating behavioral analytics to combat attacks Another effective way to enhance bot detection is through the use of behavioral analytics. This technology helps track user activity and identify patterns that may suggest malicious bot behavior. By analyzing aspects such as typing speed, mouse movement and the way users interact with websites, businesses can gain real-time insights into whether a visitor is human or a bot. Behavioral analytics in fraud uses machine learning and advanced algorithms to continuously monitor and refine user behavior patterns. This allows businesses to identify bot attacks more accurately and prevent them before they cause harm. By analyzing real-time behaviors, such as how fast someone enters information or their browsing habits, businesses can flag suspicious activity that traditional methods might miss. Why partner with Experian? What companies need is fraud and bot protection with a positive customer experience. We provide account takeover fraud prevention solutions that can help protect your company from bot attacks, fraudulent accounts and other malicious attempts to access your sensitive data. Experian's approach embodies a paradigm shift where fraud detection increases efficiency and accuracy without sacrificing customer experience. We can help protect your company from bot attacks, fraudulent accounts and other malicious attempts to access your sensitive data.  Learn more This article includes content created by an AI language model and is intended to provide general information. 1"Bad bot traffic accounts for nearly 30% of APAC internet traffic," SMEhorizon, June 13, 2023. https://www.smehorizon.com/bad-bot-traffic-accounts-for-nearly-30-of-apac-internet-traffic/2"What is a bot?" AWS. https://aws.amazon.com/what-is/bot/3Nield, David. "How ChatGPT — and bots like it — can spread malware," Wired, April 19, 2023. https://www.wired.com/story/chatgpt-ai-bots-spread-malware/4"What is a DDoS attack?" AWS. https://aws.amazon.com/shield/ddos-attack-protection/

It's 2024, and it has never been easier to buy a car in person or online, but automobiles are not quite as affordable as prior to the pandemic. While everyone is looking for the best car deal, some folks are pushing it too far and are falling for auto scams. What is auto lending fraud? Fraud perpetrators are drawn to sectors they perceive as highly lucrative. The accessibility of online vehicle financing and purchasing, coupled with the substantial financial magnitude associated with automotive transactions, renders the auto industry an optimal avenue for cash-out endeavors. Auto lending fraud refers to deceptive or fraudulent activities related to obtaining or processing auto finance. This can involve various schemes aimed at misleading lenders, financial institutions, or individuals involved in the lending process. Criminal networks now operate on social media sites like Facebook and Telegram, offering a unique car buying service using synthetic identities. They create synthetic identities, finance cars with no down payment, and deliver vehicles to addresses chosen by buyers. The process involves selecting a car online, sending a small amount of dollars and a photo against a white background, and receiving a fake driver's license. Those networks claim to exploit car sites' policies successfully. While appealing to those in urgent need of a car, the service poses significant risks as the synthetic identity may be used for other fraudulent activities beyond car purchase. Who is at risk? Everyone involved in the car buying process is at risk of falling victim to auto loan fraud. Car buyers looking to secure financing, as well as lenders, need to be aware of the potential red flags and take necessary precautions to safeguard their interests. Thieves leverage the internet and electronic transactions to perpetrate auto loan fraud. While the growth of online commerce has improved many aspects of trade, it has also made personally identifiable information and financial details vulnerable to data breaches. Unscrupulous individuals can gain unauthorized access to such information, providing the foundation for various identity theft schemes. The internet also facilitates the creation of seemingly legitimate documents that support auto loan fraud. Online services exist to help fraudsters fabricate income statements and fake employment verification from fictitious companies. This trend has made auto loan fraud an increasingly popular method for acquiring vehicles with minimal cash and risk. Another auto loan fraud trend is the increased use of CPN (Credit Privacy Number). Credit Repair firms introduced a novel strategy targeting consumers — the CPN (Credit Privacy Number). Marketed as a nine-digit alternative to a Social Security Number (SSN), CPNs are purportedly usable for obtaining credit. However, it is crucial to note that utilizing a CPN for credit applications constitutes a criminal offense, potentially leading to legal consequences, and car dealerships should not accept them.  Detecting auto loan fraud There are several types of auto loan fraud worth noting to better understand the landscape: Income fabrication: Prospective buyers may falsify their income details to qualify for a larger loan or better terms. Lenders should verify income using documents like pay stubs, tax returns, or bank statements and watch out for inconsistencies. Employment misrepresentation: Applicants could lie about their job titles or employment status. Lenders should verify employment details through HR departments or by directly contacting the employer. Trade-in vehicle deception: Some individuals may overstate the value of their trade-in vehicle to secure a higher loan amount. Lenders should perform thorough appraisals or consult trusted sources to ascertain the accurate value of the trade-in. Identity fraud: Fraudsters can assume someone else's identity, commit first party fraud or create a fictitious persona to obtain an auto loan. Lenders must verify the applicant's identity using reliable identification documents and consider using identity verification tools. Forged documentation: Fraudsters may forge or alter documents like income statements, bank statements, or driver's licenses. Lenders should scrutinize documents carefully for discrepancies or signs of tampering. Straw borrower fraud: In this scenario, someone with poor credit convinces a friend or relative with better credit to front the deal, posing as the buyer. A better credit score allows for better terms or a more valuable vehicle. The actual buyer may continue to make payments to the friend, or the loan may become delinquent, negatively affecting the friend's credit score. In extreme cases, the straw buyer is part of a fraud ring, and the vehicle has already been sold in a foreign market. Synthetic identity fraud: Data breaches providing personally identifying information enable identity theft schemes. Perpetrators use illicitly acquired information to create false borrower profiles that appear authentic. These profiles typically have excellent credit, a social security number, an affluent home address, stable employment, and other attributes that make them seem like desirable borrowers. However, a detailed investigation reveals subtle inconsistencies indicative of high risk. How to prevent auto loan fraud To combat auto loan fraud and protect profitability, auto lenders can leverage technological advancements. By applying analytics and machine learning to millions of loan applications and histories, you can identify fraudulent patterns and inconsistencies. Machine learning can determine the type of suspected fraud and provide a confidence factor to guide further investigation and verification. Additionally, you should: Conduct thorough background checks on prospective buyers and verify their personal information and documents. and verify their personal information and documents. Implement a comprehensive loan underwriting process that includes income verification, employment verification, and collateral evaluation. Educate employees about common fraud schemes, warning signs, and best practices to ensure they remain vigilant during loan applications. Foster a culture of cooperation with local law enforcement agencies, sharing information about suspected fraudsters to help prevent future incidents. It is important for individuals and businesses to be vigilant and report any suspicious activity. Car dealerships and financial institutions work to prevent fraud through proper identification verification, credit checks, and adherence to legal and ethical standards. If you suspect fraudulent activity or identity theft, it is crucial to report it to the appropriate authorities immediately. Gearing-up Taking advantage of the latest fintech capabilities, such as cloud-based loan origination that integrates analytics, machine learning, and automated verification services, can significantly reduce the likelihood of fraudulent applications becoming another auto lending fraud statistic. By combining the best data with our automated ID verification checks, Experian helps you safeguard your business and onboard customers efficiently. Our best-in-class solutions employ device recognition, behavioral biometrics, machine learning, and global fraud databases to spot and block suspicious activity before it becomes a problem. Learn more about our automotive fraud prevention solutions *This article includes content created by an AI language model and is intended to provide general information.

Financial institutions, merchants, and e-commerce platforms are no strangers to fraud, especially in the realm of payments. With the rise of digital currency, fraudsters are becoming more inventive, making it increasingly difficult to detect and prevent payment fraud. In this blog post, we discuss payment fraud and ways to protect your organization and your customers. What is payment fraud? Payment fraud occurs when someone uses false or stolen payment information to make a purchase or transaction. The most common types of payment fraud include: Phishing: Through emails or text messages, scammers disguise themselves as trustworthy sources to lure recipients into sharing their personal information, such as account passwords and credit card numbers. Card not present fraud: This type of fraud is one of the most challenging forms of payment fraud to detect and prevent. It occurs when a criminal uses a stolen or compromised credit card to make a purchase online, in-person, or by other means where the card is not physically present at the time of the transaction. Account takeover fraud: This type of fraud occurs when fraudsters gain unauthorized access to an individual’s account and carry out fraudulent transactions. They take over accounts by gathering and using personal or financial details to impersonate their victims. The rise of online payment fraud Online payments have become a prime destination for fraudsters as more consumers choose to store card details and make purchases digitally. As a result, consumers believe that it’s the responsibility of businesses to protect them online. If there’s a lack of trust and safety, consumers will have no problem switching providers, leading to declines in customer loyalty and monetary losses for organizations. No matter the type of payment fraud, it can result in devastating consequences for your organization and your customers. According to Experian’s 2024 U.S. Identity and Fraud Report, fraud scams and bank fraud schemes resulted in more than $458 billion in losses globally. On the consumer side, 52 million Americans had fraudulent charges on their credit or debit cards, with unauthorized purchases exceeding $5 billion. Given these findings, it’s more important than ever to implement robust online payment fraud detection and prevention measures. How can payment fraud be detected and prevented? Approaches to payment fraud detection and prevention have evolved over time. Some of the current and emerging trends include: Additional layers of security: Security measures like two-factor authentication, a CVV code, and a billing zip code can help verify a customer’s identity and make it more difficult for fraudsters to complete a transaction. Enhanced identity verification: A credit card owner verification solution, like Experian LinkTM, matches the customer identity with the credit card being presented for payment, allowing businesses to make better decisions, reduce false declines, and protect legitimate customers. Artificial intelligence (AI) and machine learning: AI-powered models and machine learning algorithms can identify patterns consistent with fraudulent activity in real time, resulting in proactive fraud prevention and reduced financial losses. Behavioral analytics: Using behavioral analytics to monitor user behavior, such as how they navigate a website or interact with the payment process, can help identify inconsistencies and potential fraud. Token-based authentication: Tokenization protects card information by replacing sensitive data with a unique identifier (token), which makes data breaches less damaging. How Experian can help As the payments landscape continues to evolve, so do fraudsters. Experian offers a wide range of payment fraud analytics, account takeover fraud prevention and fraud management solutions that allow you to better detect and prevent payment fraud. Your organization’s reputation and your customers’ trust shouldn’t be compromised. To learn more, visit us today. Learn more This article includes content created by an AI language model and is intended to provide general information.

Fraud is a serious concern for everyone, including businesses and individuals. In fact, according to our 2023 U.S. Identity and Fraud Report, nearly two-thirds (64%) of consumers are very or somewhat concerned with online security, and over 50% of businesses have a high level of concern about fraud risk. The fraud landscape is constantly evolving, and staying vigilant against the latest trends is critical to safeguarding your organization and consumers. As we reflect on 2023, let’s look at the top fraud trends and their continued potential impact on your business. The evolution of new fraud trends When economic uncertainty reigns, a rise in fraud often follows. To begin with, consumers tend to be financially stressed in such periods and prone to making risky decisions. In addition, fraudsters are keenly aware of the opportunities inherent in unstable times and develop tactics to take advantage of them. For example, as consumers rein in spending and financial institutions struggle to maintain new account volumes, fraudsters might ramp up their new account and loan activities. Fraud is becoming more sophisticated. For instance, thanks to the rapid rise in the availability of artificial intelligence (AI) tools, fraudsters are increasingly able to impersonate companies and individuals with ease, as well as consolidate data from diverse sources and use it more efficiently. The most impactful fraud trends of 2023 The fraud trends that emerged in 2023 were diverse, though they all had one thing in common: fraudsters' keen ability to take advantage of new technologies and opportunities. And businesses are feeling the repercussions, with nearly 70% reporting that fraud losses have increased in recent years. Here are five trends we forecasted in the fraud and identity space that challenged fraud fighters on the front lines this year. Deposit and checking account fraud With everyone focused on fraud in the on-line channels, it is interesting that financial institutions reported more fraud occurring at brick-and-mortar locations. Preying on the good nature of helpful branch employees, criminals are taking risks by showing up in person to open accounts, pass bad deposits and try to work their way into other financial products.  The Treasury Department reports complaints doubling YoY, after increasing more than 150% between 2020 and 2021.  Synthetic identity fraud Not quite fake, not quite real, so-called synthetic or "Frankenstein" identities mash up real data with false information to create unique customer profiles that can outsmart retailers' or financial institutions' fraud control systems. With synthetic identity (SID) fraud real data is often stolen or purchased on the dark web and combined with other information — even Artificial Intelligence (AI)-created faces — so that fraudsters can build up a synthetic identity's credit score before taking advantage of them to borrow and spend money that will never be paid back. One major risk? As fraud rates rise due to the use of tactics like synthetic identities, it could become more challenging and expensive to access credit. Fake job postings and mule schemes Well-paying remote work was in high demand this year, creating opportunities for fraudsters to create fake jobs to harvest data such as Social Security numbers from unsuspecting applicants. Experian also predicts a continued rise in "mule" jobs, in which workers unknowingly sign on to do illegal work, such as re-shipping stolen goods. According to the Better Business Bureau, an estimated 14 million people get caught in a fake employment scam yearly. Job seekers can protect themselves by being skeptical of jobs that ask them to do work that appears suspicious, requires money, financial details, or personal information upfront. Peer-to-peer payment fraud Peer-to-peer payment tools are increasingly popular with consumers and fraudsters, who appreciate that they're both instant and irreversible. Experian expects to continue to see an increase in fraudulent activity on these payment systems, as fraudsters use social engineering techniques to deceive consumers into paying for nonexistent merchandise or even sharing access credentials. Stay safe while using peer-to-peer payment tools by avoiding common scams like requests to return accidental payments, opting for payment protection whenever possible and choosing other transaction methods like paying with a credit card. Social media shopping fraud Social media platforms are eager to make in-app shopping fun and friction-free for consumers — and many brands and shoppers are keen to get on board. In fact, approximately 58% of users in the U.S. have purchased a product after seeing it on social media. Unfortunately, these tools neglect effective identity resolution and fraud prevention, leaving sellers vulnerable to fraudulent purchases. And while buyers have some recourse when a purchase turns out to be a scam, it's wise to be cautious while shopping on social media platforms by researching sellers, only using credit cards and being cognizant of common scams, like when vendors on Facebook Marketplace ask for payment upfront. Employer text fraud Fraudulent text messages — also known as “smishing,” a mash-up of Short Messaging Service (SMS) and phishing — continues to rise. In fact, according to data security company Lookout, 2022 was the biggest year ever for such mobile phishing attacks, with more than 30 percent of personal and enterprise mobile phone users exposed every quarter. One modern example of these types of schemes? Expect to continue to see a rise in gift card fraud targeting companies. For example, an employee might receive a text from their "boss" asking them to purchase gift cards and relay the numbers. The fraudsters get to shop, and the company is left with the bill. Why fraud prevention and detection solutions matter Nearly two-thirds of consumers say they are "very" or "somewhat concerned" with online security, and more than 85 percent expect businesses to respond to their identity and fraud concerns. Addressing and preventing fraud — and communicating these fraud-prevention actions to customers — is an essential strategy for businesses that want to maintain customer trust, thereby decreasing churn and maximizing conversions on new leads. There's a financial imperative to address fraud as well. Businesses stand to lose a great deal of money without adequate fraud prevention strategies. Account takeover fraud, for example, is an increasing threat to financial institutions, which saw a 90 percent increase in account takeover losses from 2020 to 2021. By making account takeover fraud prevention a priority, financial institutions can alleviate risks and prevent major losses. How to build an effective fraud strategy in 2024 In 2024, fraud management solutions must be even more technically advanced than the fraudulent techniques they're combating. But more than that, they need to be appealing to consumers, who are likely to abandon signup or purchase attempts when they become too onerous. In fact, 37% of consumers have moved their business elsewhere due to a negative account opening experience. Worryingly for businesses, this number was even higher among high-income households and those aged 25 to 39. To succeed, effective fraud strategies must be seamless, low friction, data-driven and customer-focused. That means making use of up-to-date technologies that boost security while prioritizing a positive customer experience.  Concerned about fraud? Let Experian help As we look back at the top fraud trends of 2023, it's clear that scammers are becoming increasingly sophisticated in their methods. Fraud can create huge risks for your business — but there are ways to act. Experian's suite of fraud prevention and identity verification tools can help you detect and combat fraud. Find out more about Experian's fraud risk management strategies and how they can help keep you and your customers safe. Learn more

In today’s fast-paced world, the telecommunications industry is not just about connecting calls or sending messages. It’s about creating seamless digital experiences, especially when onboarding new customers. However, with the rise of digital services, the industry faces an increasing challenge: the need to mitigate fraud while streamlining the onboarding process.  The digital onboarding revolution Digital onboarding has transformed the way customers join telecommunications services. No longer are people required to visit a physical store or wait for lengthy paperwork. Instead, they can sign up for mobile, internet or TV services from the comfort of their homes, often within minutes. The convenience, however, has opened new doors for fraudsters. As the onboarding process happens online, the risk of identity theft, synthetic identity fraud and other fraudulent activities has surged. So, how can telecom companies provide fritctionless experiences while keeping fraud at bay? Mitigating fraud in telecommunications onboarding Know your customer (KYC) verification: Implement robust KYC solutions to verify the identity of new customers. This may include identity document checks, facial recognition or biometric authentication. Device and location data; and velocity: Analyze the device and location data of applicants. Does the device match the customer’s claimed location? Unusual patterns could signal potential fraud.  Behavioral analysis: Monitor user behavior during the onboarding process. Frequent changes in information or suspicious browsing activity may indicate fraudulent intent.   Machine learning (ML) and artificial intelligence (AI): Leverage AI/ML algorithms to detect patterns and anomalies humans might miss. These technologies can adapt and evolve to stay ahead of fraudsters.   Document verification: Use document verification services to ensure that documents provided by customers are genuine. This can include checks for altered or forged documents. Industry data sharing–consortia: Collaborate with industry databases and share fraud-related information to help identify applicants with a history of fraudulent activity or reveal patterns. The balancing act While it’s crucial to mitigate fraud, telecommunication companies must strike a balance between security and a seamless onboarding experience. Customers demand a hassle-free process, and overly stringent security measures can deter potential subscribers. By combining advanced technology, behavioral analysis and proactive fraud prevention strategies, telecom companies can create a secure digital onboarding journey that minimizes risk without compromising user experience. In doing so, they empower customers to embrace the convenience of digital services while staying one step ahead of fraudsters in today’s interconnected world.  Learn more about Experian and the telecom industry Learn more about our fraud and identity solutions

The Federal Reserve (Fed) took a big step towards revolutionizing the U.S. payment landscape with the official launch of FedNow, a new instant payment service, on July 20, 2023. While the new payment network offers advantages, there are concerns that fraudsters may be quick to exploit the new real-time technology with fraud schemes like automated push payment (APP) fraud. How is FedNow different from existing payment networks? To keep pace with regions across the globe and accelerate innovation, the U.S. created a alternative to the existing payment network known as The Clearing House (TCH) Real-Time Payment Network (RTP). Fraudsters can use the fact that real-time payments immediately settle to launder the stolen money through multiple channels quickly. The potential for this kind of fraud has led financial regulators to consider measures to better protect against it. While both FedNow and RTP charge a comparable fee of 4.5 cents per originated transaction, the key distinction lies in their governance. RTP is operated by a consortium of large banks, whereas FedNow falls under the jurisdiction of the Federal Reserve Bank. This distinction could give FedNow an edge in the market. One of the advantages of FedNow is its integration with the extensive Federal Reserve network, allowing smaller local banks across the country to access the service. RTP estimates accessibility to institutions holding approximately 90% of U.S. demand deposit accounts (DDAs), but currently only reaches 62% of DDAs due to limited participation from eligible institutions. What are real-time payments? Real-time payments refer to transactions between bank accounts that are initiated, cleared, and settled within seconds, regardless of the time or day. This immediacy enhances transparency and instills confidence in payments, which benefits consumers, banks and businesses.Image sourced from JaredFranklin.com Real-time payments have gained traction globally, with adoptions from over 70 countries on six continents. In 2022 alone, these transactions amounted to a staggering $195 billion, representing a remarkable year-over-year growth of 63%. India leads the pack with its Unified Payments Interface platform, processing a massive $89.5 billion in transaction volume. Other significant markets include Brazil, China, Thailand, and South Korea. The fact that real-time payments cannot be reversed promotes trust and ensures that contracts are upheld. This also encourages the development of new methods to make processes more efficient, like the ability to pay upon receiving the goods or services. These advancements are particularly crucial for small businesses, which disproportionately bear the burden of delayed payments, amounting to a staggering $3 trillion globally at any given time. The launch of FedNow marks a significant milestone in the U.S. financial landscape, propelling the country towards greater efficiency, transparency, and innovation in payments. However, it also brings a fair share of challenges, including the potential for increased fraud. Are real-time payments a catalyst for fraud? As the financial landscape evolves with the introduction of real-time payment systems, fraudsters are quick to exploit new technologies. One particular form of fraud that has gained prominence is authorized push payment (APP) fraud. APP fraud is a type of scam where fraudsters trick individuals or businesses into authorizing the transfer of funds from their bank accounts to accounts controlled by the fraudsters. The fraudster poses as a legitimate entity and deceives the victim into believing that there is an urgent need to transfer money. They gain the victim's trust and provide instructions for the transfer, typically through online or telephone banking channels. The victim willingly performs the payment, thinking it is legitimate, but realizes they have been scammed when communication halts. APP fraud is damaging as victims authorize the payments themselves, making it difficult for banks to recover the funds. To protect against APP fraud, it's important to be cautious, verify the legitimacy of requests independently, and report any suspicious activity promptly. Fraud detection and prevention with real-time payments Advances in fraud detection software, including machine learning and behavioral analytics, make unusual urgent requests and fake invoices easier to spot — in real time — but some governments are considering legislation to ensure more support for victims. For example, in the U.K., frameworks like Confirmation of Payee have rolled out instant account detail checks against the account holder’s name to help prevent cases of authorized push payment fraud. The U.K.’s real-time payments scheme Pay.UK also introduced the Mule Insights Tactical Solution (MITS), which tracks the flow of fraudulent transactions used in money laundering through bank and credit union accounts. It identifies these accounts and stops the proceeds of crimes from moving deeper into the system – and can help victims recover their funds. While fraud levels related to traditional payments have slowly come down, real-time payment-related fraud has recently skyrocketed. India, one of the primary innovators in the space, recorded a 23% rise in fraud related to its real-time payments system in 2022. The same ACI report stated that the U.S., making up only 1.2% of all real-time payment transactions in 2022, had, for now, avoided the effects. However, “there is no reason to assume that without action, the U.S. will not follow the path to crisis levels of APP scams as seen in other markets.” FedNow currently has no specific plans to bake fraud detection into their newly launched technology, meaning the response is left to financial institutions. Fight instant fraud with instant answers Artificial Intelligence (AI) holds tremendous potential in combating the ever-present threat of fraud. With AI technologies, financial institutions can process vast amounts of data points faster and enhance their fraud detection capabilities. This enables them to identify and flag suspicious transactions that deviate from the norm, mitigating identity risk and safeguarding customer accounts. The ability of AI-powered systems to ingest and analyze real-time information empowers institutions to stay one step ahead in the battle against account takeover fraud. This type of fraud, which poses a significant challenge to real-time payment systems, can be better addressed through AI-enabled tools. With ongoing monitoring of account behavior, such as the services provided by FraudNet, financial institutions gain a powerful weapon against APP fraud. In addition to behavioral analysis, location data has emerged as an asset in the fight against fraud. Incorporating location-based information into fraud detection algorithms has proven effective in pinpointing suspicious activities and reducing fraudulent incidents. As the financial industry continues to grapple with the constant evolution of fraud techniques, harnessing the potential of AI, coupled with comprehensive data analysis and innovative technologies, becomes crucial for securing the integrity of financial transactions. Taking your next step in the fight against fraud Ultimately, the effectiveness of fraud prevention measures depends on the implementation and continuous improvement of security protocols by financial institutions, regulators, and technology providers. By staying vigilant and employing appropriate safeguards, fraud risks in real-time payment systems, such as FedNow, can be minimized. To learn more about how Experian can help you leverage fraud prevention solutions, visit us online or request a call.  *This article leverages/includes content created by an AI language model and is intended to provide general information.

This article was originally published on multifamilyinsiders.com One of the challenges currently facing the rental housing industry is the amount of lease application fraud. An Entrata study found a 111% increase in lease application fraud between 2019 and 2020. In the same study, 55% of surveyed apartment managers and rental operators said their properties experience fraudulent lease application attempts every few months, and 15% said their communities were subjected to multiple attempts each month. One-third of respondents described themselves as "very concerned" about application fraud. Just as alarming as the rise in attempts is the apparent likelihood of success. In the study, 65% of apartment managers said they are not confident in their current fraud prevention efforts. Some applicants can use a range of tools to commit fraud such as fake pay stubs, bank statements, employment records, and other falsified documents. Unfortunately, readily available computer technology makes it all too easy for applicants to produce these falsified documents. Tools to fight against fraud Apartment communities that rely on an overly manual screening process may find themselves at a disadvantage in the current landscape. Relying on associates to manually verify things like income and employment history can increase the risk of a deceitful applicant being successful. In addition, these processes can be extraordinarily time-consuming, which means leasing associates have less bandwidth for their many other important duties and responsibilities. Not to mention, the units stay unoccupied while these time-consuming verifications are being done manually. Among the general screening technologies that operators should consider: Automated verification of income, assets and employment — These solutions eliminate the need for operators to collect this kind of documentation from applicants. Furthermore, it eliminates the opportunity for applicants to supply falsified supporting documentation. Frictionless authentication — A multi-layered identity verification process for those applying for rental housing, frictionless authentication detects the subtle and not-so-subtle signs that an applicant is, to one degree or another, using a false identity. By highlighting discrepancies, the process assigns a “score” to quantify the likelihood that misrepresentation is taking place. Additional confirmation of the applicant’s identity can be completed using a one-time passcode (OTP) or knowledge-based authentication (KBA). This technology also uses device intelligence to recognize the risks associated with the physical devices (such as computers, tablets, and smartphones) that consumers use for online applications to identify potential imposters. In today's landscape, apartment owners and operators need to make sure they're protecting themselves against fraudulent applicants, who may not fulfill their financial obligations as outlined in their leases. By embracing the ever-growing array of advanced screening tools and technologies, owners and operators can achieve that protection and reduce their risk significantly — and save their associates time and energy.

Today’s digital-first world is more interconnected than ever. Financial transactions take place across borders and through various channels, leaving financial institutions and their customers at increasing risk from evolving threats like identity theft, fraud and others from sophisticated crime rings. And consumers are feeling that pressure. A recent Experian study found that over half of consumers feel like they are more of a target for online fraud than a year ago. Likewise, more than 40% of businesses reported increased fraud losses in recent years. It’s not only critical that organizations ensure the security and trustworthiness of digital transactions and online account activity to reduce risk and losses but what consumers expect. In the same Experian study, more than 85% of consumers said they expect businesses to respond to their fraud concerns, an expectation that has increased over the last several years.   Businesses and financial institutions most successful at mitigating fraud and reducing risk have adopted a layered, interconnected approach to identity confirmation and fraud prevention. One vital tool in this process is identity document verification. This crucial step not only safeguards the integrity of financial systems but also protects individuals and organizations from fraud, money laundering and other illicit activities. In this blog, we will delve into the significance of identity document verification in financial services and explore how it strengthens the overall security landscape.  Preventing identity theft and fraud Identity document verification plays a vital role in thwarting identity theft and fraudulent activities. By verifying the authenticity of identification documents, financial institutions can ensure that the individuals accessing their services are who they claim to be. Sophisticated verification processes, including biometric identification and document validation, help detect counterfeit documents, stolen identities and impersonation attempts. By mitigating these risks, financial institutions can protect their customers from unauthorized access to accounts, fraudulent transactions and potential financial ruin. Compliance with regulatory requirements Financial institutions operate in an environment governed by stringent regulatory frameworks designed to combat money laundering, terrorist financing and other financial crimes. Identity document verification is a key component of these regulatory requirements. By conducting thorough verification checks, financial service providers can adhere to Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. Compliance safeguards the institution's reputation and helps combat illicit financial activities that can have far-reaching consequences for national security and stability. Mitigating risk and enhancing trust Effective identity document verification mitigates risks associated with financial services. By verifying the identity of customers, financial institutions can reduce the likelihood of fraudulent activities, such as account takeovers, unauthorized transactions and loan fraud. This verification process bolsters the overall security of the financial system and creates a more trustworthy environment for stakeholders. Trust is fundamental in establishing long-lasting customer relationships and attracting new clients to financial institutions.   Facilitating digital onboarding and seamless customer experience As financial services embrace digital transformation, identity document verification becomes essential for smooth onboarding processes. Automated identity verification solutions enable customers to open accounts and access services remotely, eliminating the need for in-person visits or cumbersome paperwork. By streamlining the customer experience and minimizing the time and effort required for account setup, financial institutions can attract tech-savvy individuals and enhance customer satisfaction.  Combating money laundering and terrorist financing Proper document verification is a key component of combating money laundering and terrorist financing activities. By verifying customer identities, financial institutions can establish the source of funds and detect suspicious transactions that may be linked to illicit activities. This proactive approach helps protect the integrity of the financial system, supports national security efforts, and contributes to the global fight against organized crime and terrorism. Identity document verification is a vital component in the layered, interconnected approach to mitigating and preventing fraud in modern financial services. By leveraging advanced technologies and robust verification processes, financial institutions can ensure the authenticity of customer identities, comply with regulatory requirements, mitigate risk and enhance trust.  As financial services continue evolving in an increasingly digital landscape, identity document verification will remain a crucial tool for safeguarding the security and integrity of the global financial system.  For more information on how Experian can help you reduce fraud while delivering a seamless customer experience, visit our fraud management solutions hub.   Learn more

Written by: Mihail Blagoev As there is talk about the global economy potentially heading into a recession, while some suggest that it has already started, there is an expectation that many of the world's countries will see their economic output decline in the next couple of months or a year. Among the negative trends that can occur during a recession are companies making fewer sales and people losing their jobs. Unfortunately, just like any other economic crisis, fraud is expected to go in the opposite direction as criminals continue finding innovative ways to attack consumers when they’re most vulnerable. There is also a concern that first-party fraud attempts might rise as genuine consumers are pushed over the edge by inflation and economic uncertainty. With that in mind, here are six fraud trends that are likely to happen during a recession: Fraudsters exploiting the vulnerable  It is well-documented that fraudsters found numerous ways to exploit the vulnerable during the pandemic. Unfortunately, this is expected to happen again in the coming months. As the cost of living rises, criminals will try to use that in their favor by looking for people who can't pay their utility bills or can't afford the price of gas or even food. Fraudsters will try to exploit that by offering them deals, discounts, refunds, or just about anything that will make people believe they are paying less for something that has increased in value or is out of reach at its normal price. Fraudsters have two main goals behind these tactics – stealing personal information to use in other crimes or gaining immediate financial benefits. Although their tactics are well-known – applying pressure on their victims to make quick decisions or offering them something that sounds like a great deal, but in truth, it isn't – that won't prevent them from trying. These scams show that, unlike in other industries, criminals do not rely on high success rates to achieve their goals. All they need is one or two victims out of every few hundred to fall for their schemes. Loan origination fraud Periods of financial instability often result in an increase in first-party fraud, among others. This could take many forms, and there is a possibility for an increase in fraudulent loan applications by genuine consumers to be among the most popular ones. In this type of fraud, bad actors lie on registration forms or applications to gain access to funds they wouldn't normally receive if they added their real information. That could be done by lying about their income and employment information, usually inflating their salaries, extending the amount of time they worked for a certain company, or simply adding a company they have never worked for. Other popular forgeries include anything from supplying fake phone numbers and addresses to providing fake bank statements and utility bills. Money mules Recessions can result in layoffs or people looking for work not being able to find any. That's another opportunity for fraudsters to exploit the vulnerable by offering them “jobs.” This could be achieved by posting job ads on real employment websites or social media. Once recruited, people are asked to open new bank accounts or use their previously opened accounts to transfer funds to accounts that are in the possession of criminals. In the end, the funds get laundered, while the genuine account holder receives a fee for the service. People of all ages are a possible target, but this is especially true for younger generations who often don't understand the consequences of their activities.  Friendly fraud Another type of first-party fraud that could go up as a result of the increased economic pressures could be friendly fraud. In this type of fraud that mostly affects the retail industry, consumers charge back genuine payments made by them in order to end up with both the product purchased and the funds for it back in their possession. They could then keep the product or quickly resell it for less than its original value. Luxury goods and electronics could be especially attractive for this type of fraud. Claiming non-deliveries or transactions not being recognized could be among the top reasons used for charging back the transactions. Investment fraud During times of economic hardship, people are often looking for ways to keep their savings from getting eaten by inflation. Investments in property could be one solution, but as it is not affordable for everyone, people are also looking for other ways to invest their money. While this isn’t exactly a vulnerability, it is something that criminals are looking to exploit greatly. They usually reach out to potential victims through social media while also presenting them with fake websites that mimic those by real investors. The opportunities being offered can range from cryptocurrency to various schemes and products that don’t exist or are worthless. However, after the criminals obtain possession of the funds, they discontinue their contact with the victims. Fake goods While this shouldn't happen to the same extent that was seen in 2020, there is a chance that some goods might disappear from certain markets. There could be a variety of reasons for that, from companies limiting their production or going out of business due to inability to pay their bills or shortage in sales to issues with supply chains due to the high gas and oil prices. Expect fraudsters to be the first to move in if there are shortages and start offering fake products or goods that will never arrive.  It is still difficult to measure if or when a recession will hit each corner of the world or how long it will take for the next phase in the financial cycle to begin. However, one thing that is certain is that the longer it takes the economy to settle, the more opportunities criminals will have to benefit from their schemes and come up with new ways to defraud people. Businesses should monitor the fraud environment around them closely and be ready to adjust their fraud management strategies quickly. They should also understand the complexity of the problems in front of them and that they will likely need a mixture of capabilities to sort them out while keeping their customer base happy. This is where fraud orchestration platforms could help by offering the needed solutions to solve multiple fraud issues and the flexibility to turn any of these tools on and off when needed. Contact us