Fraud losses climbed to $56 billion in 2020 and identity fraud scams accounted for a staggering $43 billion of that cost, according to a new report.
The reduction in transaction activity in 2020, combined with financial institutions’ more robust antifraud measures, made it harder for criminals to succeed in their ‘traditional’ fraud activities, according to Javelin Strategy & Research, which provides insights for financial institutions, government, payments companies, merchants, fintechs and technology providers.
Criminals instead opted to interact directly with their fraud victims via identity fraud scams, seeing that direct interaction yields better chances of success.
Like many other research papers during the pandemic, Javelin’s report finds that COVID has had a dramatic impact on consumer financial behavior, prompting them to increase their usage of streaming services, digital commerce and payments. People also used email and text messaging, for both work and personal life, more than ever. This shift expanded the attack surface for novel fraud scams.
Cyber crooks also pounced on new vulnerabilities presented by the explosion in remote loan originations and closings, the research found.
As consumers relied increasingly on digital payment products during 2020, identity fraud scams kept pace with this shift in behavior, the report reveals. And losses related to digital wallets and peer-to-peer (P2P) accounts was particularly notable in the case of economic stimulus payment fraud, unemployment benefits fraud, and identity fraud scams.
“The culture of fraud is clearly shifting. The pandemic has created so many more points of vulnerability for families and businesses,” said Paige Schaffer, CEO of Global Identity & Cyber Protection at Generali Global Assistance. “Whether it’s payment products meant to enhance convenience, remote operations, additional logins or even simply more time online, there is more opportunity now than ever for compromise.”
There is also some good news to be had. Fingerprint scanning and facial recognition are growing in popularity with consumers. Javelin Strategy & Research says growing acceptance of digital payment channels presents an opportunity to increase consumer awareness of stronger forms of authentication. The researchers believe safe digital transactions will form the foundation of a productive and secure remote financial ecosystem as consumers become increasingly savvy online.
You can check if your personal info has been stolen or made public on the internet with Bitdefender’s Digital Identity Protection tool.