Experian has released its annual Future of Fraud Forecast, which reveals five fraud threats for the new year. With consumers continuing to take a digital-first approach to everything from shopping, dating and investing, fraudsters are finding new and innovative ways to commit fraud.
This year’s threats include:
Buy Now, Pay Never
The Buy Now, Pay Later (BNPL) space has grown massively recently. In fact, the number of BNPL users in the US has grown by more than 300% per year since 2018, reaching 45 million active users in 2021 who are spending more than $20.8 billion1.
Without the right identity verification and fraud mitigation tools in place, fraudsters will take advantage of some BNPL companies and consumers in 2022.
Experian predicts BNPL lenders will see an uptick in two types of fraud: identity theft and synthetic identity fraud, when a fraudster uses a combination of real and fake information to create an entirely new identity. This could result in significant losses for BNPL lenders.
Beware of Cryptocurrency Scams
Digital currencies, such as cryptocurrency, have become more conventional and scammers have caught on quickly. According to the FTC, investment cryptocurrency scam reports have skyrocketed, with nearly 7,000 people reporting losses totalling more than $80 million from October 2020 to March 20212.
In 2022, Experian predicts that fraudsters will set up cryptocurrency accounts to extract, store and funnel stolen funds, such as the billions of stimulus dollars that were swindled by fraudsters.
Double the Trouble for Ransomware Attacks
In the first six months of 2021, there was $590 million in ransomware-related activity, which exceeds the value of $416 million reported for the entirety of 2020 according to the U.S. Treasury’s Financial Crimes Enforcement Network3.
Experian predicts that ransomware will be a significant fraud threat for companies in 2022 as fraudsters will look to not only ask for a hefty ransom to gain back control, but criminals will also steal data from the hacked company.
This will not only result in companies losing sales because of the halt caused by the ransom attack, but it will also enable fraudsters to gain access and monetise stolen data such as employees’ personal information, HR records and more – leaving the company’s employees vulnerable to personal fraudulent attacks.
Because more consumers went on dating apps and social media to look for love during the pandemic, fraudsters saw an opportunity to create intimate, trusted relationships without the immediate need to meet in-person.
The FBI found that from January 1, 2021 — July 31, 2021, the FBI Internet Crime Complaint Center received over 1,800 complaints, related to online romance scams, resulting in losses of approximately $133 million4.
Experian predicts that romance scams will continue to see an uptick as fraudsters take advantage of these relationships to ask for money or a “loan” to cover anything from travel costs to medical expenses.
Digital Elder Abuse Will Rise
According to Experian’s latest Global Insights Report, there has been a 25% increase in online activity since the start of Covid-19 as many, including the elderly, went online for everything from groceries to scheduling health care visits.
This onslaught of digital newbies presents a new audience for fraudsters to attack. Experian predicts that consumers will get hit hard by fraudsters through social engineering (when a fraudster manipulates a person to divulge confidential or private information) and account takeover fraud (when a fraudster steals a username and password from one site to takeover other accounts).
This could result in billions of dollars of losses in 2022.
According to Juniper Research, merchant losses to online payment fraud will exceed $206 billion cumulatively for the period between 2021 and 20255. That’s why it’s crucial that businesses get the right fraud prevention tools in place to anticipate future scams and mitigate financial losses.
1 The Economic Impact of Buy Now, Pay Later in the U.S.: https://afterpay-corporate.yourcreative.com.au/wp-content/uploads/2021/10/Economic-Impact-of-BNPL-in-the-US-vF.pdf
2 Federal Trade Commission: https://www.ftc.gov/news-events/blogs/data-spotlight/2021/05/cryptocurrency-buzz-drives-record-investment-scam-losses
3 U.S. Treasury’s Financial Crimes Enforcement Network: https://www.fincen.gov/sites/default/files/2021-10/Financial Trend Analysis_Ransomeware 508 FINAL.pdf
4 Federal Bureau of Investigation: https://www.ic3.gov/Media/Y2021/PSA210916
5 Juniper Research, Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2021-2025, https://www.juniperresearch.com/pressreleases/online-payment-fraud-losses-to-exceed-206-billion
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