Refund fraud as a service: Digital Payment fraud on the rise

Digital payment frauds have increased manifold in this fiscal year. This unprecedented rise sent alarm bells ringing across the banking ecosystem. Phishing, smishing, vishing, you name it, and it has occurred, and that too in huge numbers. In India, UPI-related scams took a 55% share in total digital payment frauds.

The biggest digital payment fraud trends of 2023 are as follows:

Phishing, smishing, vishing

Stealing sensitive personal information by impersonating a bonafide source like a bank or social media channel, or even a reputed organization is quite rampant these days. Every site on the internet is infested with bots. Fraudsters use these bots to get information from customers. These automated bots impersonate a business authority and hoodwink the visitors easily. Spoofed websites, malware-infested links, and even SMS or emails that look very genuine are used to convince an unsuspecting customer to furnish personal data.

Fake identity fraud

Technological advancements are a great boon to mankind, but cutting-edge technology like AI can be used to emulate a person’s voice and image to create very convincing videos and audio clips, making it very difficult for business to verify the original identity of customers. Voice cloning, fake facial images, etc are used by social engineering fraudsters to create fake, duplicate customer profiles and take advantage of compromised data.

Malware

Fake customer support, compromised links, cashback links, emails, etc. are used to entice the customer to download an app, click a link, or install malware. Installing such malware will give fraudsters access to screen mirroring or even remote desktop access. Once the unsuspecting customer clicks the bait and installs the app, fraudsters have access to personal information and can use these to get account details or card details.

Refund Frauds

Refund frauds are increasingly rampant where consumer and cybercriminal are hand in glove and the fraudster impersonate the customer to defraud merchants through a host of unscrupulous means like asking for a refund with fake images that claim breakage or leaks or half-used containers. Though it looks like a major concern for merchants, refund frauds often jeopardize consumer virtual assets like emails, passwords, etc.

Prevention methods for merchants

1. The first and foremost way to stay alert against any fraud is to be fully aware of all its ill effects. Generating widescale awareness among customers and educating them is extremely important so that they can detect early warning signs and deter scams.
2. Implementing strong security measures to safeguard customer data.
3. Leveraging intelligence networks to buttress payment data ecosystem to assess risks in advance.
4. Consistently monitoring transactions
5. Ensuring 100% compliance with all local and global regulations like PCI DSS, PSD2, etc.
6. Ensuring robust fraud detection and mitigation features are enabled.
7. Communicate with your digital payment service provider and ensure 3D secure authentications are enabled.
8. Be cautious of shipping and billing address disparity.

Prevention methods for consumers

1. Stay alert and be aware of frequent scams
2. Make yourself equipped with ample information on how these fraudsters can access your personal data.
3. Do not follow or click on any suspicious links.
4. Abstain from downloading documents, files, and media from unprotected websites.
5. Abstain from entering your personal and card data details on third-party websites or suspicious social media platforms.
6. Report to your bank immediately in case of any mishap of data theft.

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