The 2022 NICE Actimize Fraud Insights Report identifies and analyses the leading fraud threats and patterns that impacted leading global financial institutions in 2021.
Noting that banking fraud continues to rise, the data-driven research study found a 41% increase in attempted fraud over a similar evaluation conducted the year before by its data scientists.
Leveraging AI, which utilises Federated Learning techniques and collective intelligence to spot emerging threats and suspicious patterns of activity, the report was created by analysing billions of banking and payments transactions representing over $110 trillion in value.
Data scientists and fraud subject matter experts compiled anonymised data secured from a subset of its total monitored transactions, including both online and offline payments channels that covered ACH, wires, checks, card purchases, and P2P transactions.
The report aggregated and synthesised fraudulent activity patterns seen across a range of global financial institutions.
The report projects that P2P transactions will emerge as a dominant challenge impacting the 2022 threat landscape as financial institutions continue to see an acceleration of digital-initiated transactions.
In its findings, NICE Actimize noted that P2P fraud saw an increase of 63% in attempted fraud dollar value and a 38% increase in attempted fraud rate in the past year.
Older devices are cheaper and easier to infiltrate, making them the favoured choice of fraudsters. Past iOS versions are not supplied with the latest security patches, rendering them more vulnerable to attacks.
To strengthen fraud and device-based risk strategies, FSOs must add risk signals associated with older versions of mobile OSs and device models – especially devices that don’t support higher mobile data bandwidths of 4G and above. Segmentation of devices and OSs based on their age could also prove to be helpful.
Apple Pay
Fraudsters use stolen credit card data to make fraudulent purchases using Apple Pay. With Apple Pay adoption increasing and volumes soaring as an essential new payment method, it’s no surprise that fraudsters have turned their focus to this channel.
Apple Pay provides two pathways for authorising new cards on an Apple device; one for instant authorisation and one that requires additional checks.
Apple provides the same information to all participant banks for risk qualification, and each participant can interpret the data and assign a risk score on its own.
Fraudsters have found that some issuing banks issue cards that are easier to register with stolen identity information than others, mainly if 3D Secure is not employed for card-provisioning risk.
Apple ID phishing scams represent a genuine danger. For scammers, your Apple ID is the ticket to using anything Apple-related and provides access to a wealth of personal information on the cloud.
A diligent authentication mechanism for Apple Pay enrolment events, such as asking for a one-time password (OTP) sent on a registered mobile number, could significantly suppress these attacks.
Firms can strengthen protection against these attacks by enriching the Apple Pay risk score with additional data points to ascertain risk without increasing customer friction.
The report shows that increased utilisation of mobile devices for everyday purposes, such as banking, shopping, and communication, heavily impacted the fraud landscape in 2021.
Fraud increased across the board, from P2P payments and digital wallets to traditional check payments.
Among the findings, mobile channels saw the highest increase in fraud attempts, the report projects that mobile channels will continue to be a target throughout 2022.
Fraud Insights Report Key findings:
- Banking and payments transactions using mobile devices have increased substantially according to the report. But unfortunately, the popularity of mobile usage goes hand-in-hand with fraud – 61% of attempted fraud attacks through mobile apps are Account Takeovers (ATOs), the data showed.
- Fraudsters are exploiting the prevalence of mobile to target and leverage older devices. The report also showed that mobile phones using older operating systems or made before 2016 have three times more fraud attempts associated with them than newer devices or operating systems.
- Nearly half (46.9%) of attempted fraud stemmed from card-not-present transactions across payment channels. As a result, online transactions presented a growing focus in the threat landscape.
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