Digital Payment Fraud Amid A Pandemic
One of the many impacts the Covid-19 pandemic has had on our lives is that of online consumption. We have seen a rise in the use of digital payment and a decrease in cash use. More of all consumers said they would prefer to use digital payments and stop using cash entirely in the US. One in three consumers says they do not use cash due to health concerns during the ongoing pandemic. It seems that the transition to digital payments is fast-tracked due to the pandemic, locks, and prolonged periods of social distancing. Traditional offline businesses have suffered as consumers started purchasing goods and services online at an unprecedented rate. At the same time, online businesses are doing much better. No one knows how long this pandemic will linger and how long lockdowns and social distancing measures will be enforced and continue to impact our daily lives.
Fraudsters Prey On Fear And Confusion
In Canada, when Covid-19 cases started escalating back in March 2020, Prime Minister Justin Trudeau warned about scams related to phishing emails relating to charitable contributions and airline refunds. Similarly, the FBI warned against phishing emails about financial relief, testing kits, and vaccines. Authorities were quick to raise concerns about an increase in fraud relating to harvesting personal and financial information. The two main ingredients of a good scam are fear and confusion. So at the onset and continuous development of the pandemic, the tables were set for fraudsters.
The Concerns Were Not Misplaced
Looking at 2020, digital fraud jumped dramatically. The concerns back in March last year were not misplaced, but authorities could likely have done a much better job, given that detected attack volumes doubled compared to 2019. 21% of all attacks recorded were on mobile transactions, and 79% on desktop. Giving a clear indication that criminals still favor desktop for targeting payments and financial transactions. Fraud rates by industries for 2020 looked as follows:
Sixty-five attacks were reported every second—the attacks are mainly around logins and compromising user accounts. In-game abuse attacks also occurred frequently and are on the rise. In-game abuse happens in games where digital assets carry monetary value and can be traded for real money.
Retail and Travel
Many retail and traveling businesses have only adapted to ecommerce in recent years. Many of these businesses used inadequate security measures to safeguard consumers and keep transactions private. The retail sector was the main target due to the low volumes of transactions related to travel.
Finance and Fintech
Attack levels within finance and fintech were lower between January to April compared to 2019. But once the pandemic hit, the attack volumes rapidly began to rise and remained higher than in 2019 throughout 2020.
Due to remote work, remote education, and social distancing, some technologies saw a great increase in usage and became a target for fraudsters. The sector saw a dramatic increase compared to 2019.
In terms of geography, North America, including the United States and Canada, saw an increase of 37% in attack volumes compared to 2019.
Covid-19 rapidly accelerated digital payments and the way we consume goods and services. As such, the pandemic became a double-edged sword for businesses. On one side, more customers came in through digital channels. On the other side, it motivated fraudsters to attack businesses and consumers through the same digital channels. Businesses need to become better equipped to handle the increased sophistication from criminals that comes as a byproduct of increased digital payment adoption.