DIGITAL FRAUD

From cybersecurity to data protection to ad fraud, technology has evolved at a rapid pace.

And so has digital fraud.

This technological evolution juggernaut, including artificial intelligence (AI) and metaverse, is already having a huge impact as it is decentralizing applications while keeping convenience, ease and speed at its core. When technology evolves, so does innovation, and vice versa. As humans, we are all eager to adopt innovation.

The world has both kinds of people – a few numbers of the straight and ethical, and a large number for whom doing the wrong things actually borders on “good strategy”.

Therefore, the adverse impact of innovation is the rise of fraud in the digital space. And the proportion and scale of this fraud seems to be alarmingly on the rise. Banks, government institutions, online players and customers alike can suffer significant financial losses due to digital fraud. Stolen funds, fraudulent transactions, and the cost of investigating and mitigating fraud is beginning to take a heavy toll.

The challenge resides in maintaining pace with such technological evolution, especially when one part of global society is aware of frauds, while a large part of the population is yet to be made aware. Many parts of the world have already crossed that inflection point when it comes to digital payments and digital transformation, yet majority are not equipped to deal with how one needs to address situations where fraud is involved, leaving systems and people vulnerable. ?

The most dangerous attacks today are perpetrated via social engineering, activities aimed at tricking customers through psychological manipulation into giving access to personal information or committing security mistakes that let fraudsters accomplish their breaches.

Financial frauds are not a new topic, as many have already lost fair amounts of money. Moreover, social media platforms that host a lot many start-ups, besides e-tailers, are also home to many financial frauds. With a number of fraudulent transactions happening across platforms and sectors, it is imperative to incorporate customer awareness. Customer awareness becomes a critical factor as more people take to digital payments.?

Even as digital payments have eased transactions, they are packed with their own share of issues. Almost every online player or app, including government institutions, require and store large amounts of customer data. There are several pages of agreements that institutions and banks upload digitally, which not many have the time and ability to read and comprehend, yet at the end of the agreement, one has to necessarily tick okay in order to proceed. All big players put up such agreements as a way to proceed doing business. Most of these big players have strong legal teams in place.

Data leaks have become more frequent. There are no specifically available standards which satisfy the common person as to how safe their data is on the various sites and apps.

There is a destructive rise of ransomware as a service. These attacks have also become more sophisticated, thereby delivering a bigger impact.? Phishing is the first step towards cyberattack. Majority of? people across the world have lost money just by clicking on a phishing mail or sms.?

According to research conducted by CertFIN in the Cybersecurity 2023 Report, over 67.5% of actual fraud cases in 2022 started with phishing?campaigns, specifically exploiting phone calls (vishing) and SMS messages (smishing) as initial points of contact. A common practice is when fraudsters send text messages to victims, falsifying the sender (spoofing) and impersonating, for example, a bank or a courier. These messages are designed to fit into the existing legitimate conversations on the victim's phone. As a result, it becomes more difficult to realize that fraud is occurring.

It is about time to look at methods such as biometric or cross channel authentication, QR codes, tap, and authentication methods and expand beyond simply one-time password (OTP) verification. OTPs are almost archaic and time may have come to look at newer methods.

Cryptocurrency and non-fungible tokens (NFT) are yet other sectors that have managed to grab the attention of fraudsters. People have been taking content created by artists and converting it into NFTs. These are further sold in an open market, in this case, the dark web. It is believed this has further escalated the issue of copyright infringement.

Fake news, deepfakes, false reviews on online platforms, poorly educated influencers, all would in effect border on some form of fraud.

To thrive in a highly competitive landscape where cybersecurity is crucial, all institutions, banks and online players that aim to stay?close to their customers?must consider the impact that fraud can have on?people’s mental health?in the long run.

Vehicle insurance companies educate drivers and vehicle owners on the do’s and dont’s of driving carefully. But they also have clear guidelines on procedures to be followed in case of an accident or roadside problem. The same is applicable to health insurance, to fire insurance and to many other products and services. The customer generally is aware as to what and how much is available in case of a situation.

Almost all banks, financial institutions, government agencies, online players encouraging people to go online do the first part well. They regularly brief on do’s and dont’s. One has yet to see any good player putting up a good campaign giving a clear-cut process which says that if a customer takes online fraud insurance, or adequate security measures, what is the specific process, method and timeline to get matters resolved.

Just living by the rule “Caveat Emptor” ie “buyer or user beware” may not be adequate while aggressively pushing the world to go digital and online. Food for thought……………..