Trustfull's Summer Fraud Briefing

Stories about frauds and scams are increasingly penetrating the general discourse, making their way into the news cycle and becoming the focus of a growing number of podcasts, books, and films.

This is great news. The more we discuss the tactics employed by fraudsters to deceive people and businesses, the better we can protect ourselves against them.

At the same time, keeping up with all the excellent stories and reports on these topics can be a challenge. But for those taking time off during the summer, there is an opportunity to catch up on reading and delve deeper into the reports and trends shaping our industry.

To help our community stay informed and vigilant this summer, our team at Trustfull has curated a selection of four key topics and accompanying readings we found particularly enlightening.

Because even during holidays, fraudsters are still at work.

The Risks of Generative AI for Traditional KYC Methods ?

One significant consequence of the rise of Generative AI (GenAI) is the challenge it poses to the reliability of traditional Know Your Customer (KYC) methods. Viral posts on platforms like X and Reddit have shown how attackers can leverage open-source and off-the-shelf software to download a person's selfie, manipulate it with GenAI tools, and use the altered image to pass KYC tests. Even “liveness” checks can be outsmarted by GenAI using real-time deepfake tools. To combat this evolving threat, it's crucial to implement additional or alternative verification methods. Utilizing digital risk intelligence and analyzing users’ digital footprints before reaching the KYC stage is an effective way to stay ahead of fraudsters who increasingly exploit GenAI to their advantage.

Read more via Tech Crunch: Gen AI Could Make KYC Effectively Useless

The Commercial Impact of Regulatory Actions in Fintech

You know who else doesn’t take breaks during summer? Regulators. Recently, we’ve seen regulatory actions taken against various fintech companies across different countries. In the UK, the Financial Conduct Authority (FCA) has fined a Coinbase business in Britain for breaching a regulatory agreement to improve its defenses against financial crime, in the first sanction of its kind in the UK cryptoasset sector. Meanwhile, in Italy, the Banca d’Italia issued a temporary order against Qonto, mandating improvements in their anti-money laundering (AML) measures. Consequently, the Italian branch of the French fintech has temporarily halted onboarding new customers to ensure regulatory compliance. News stories like this are a reminder of the tangible commercial impact of deprioritizing or delaying upgrades to AML processes. Beyond the reputational damage, which can be difficult to quantify, the inability to onboard new clients results in lost revenue—something no company can afford to take lightly.

Read more via Reuters and LinkedIn: UK Watchdog Fines Coinbase's CB Payments , Qonto Regulatory Issues

Identity Fraud in the Gig and Ride-Sharing Economy?

Trying to penetrate the mindset and the modus operandi of a serial fraudster can be fascinating. A recent long-form piece of journalism by Lauren Smiley, published in WIRED, is dedicated to piecing together the story, motivations and feelings of Priscila Barbosa, a Brazilian woman who committed multiple identity frauds in the US between May 2018 and April 2021. During that period, Barbosa created an intricate network of fake and synthetic identities, building a thriving business by exploiting gig-economy giants like Uber and DoorDash. Her story highlights the blind spots that persist across various industries and digital platforms in identifying synthetic identities during sign-up. In such cases, relying on independently sourced information about a user’s digital presence can help raise red flags early in the onboarding process, protecting both users and businesses from illegitimate accounts and fraudulent actors.?

Read more via WIRED: Priscila, Queen of the Rideshare Mafia

The Multibillion-Dollar Cyberfraud Industry Behind Romance Scams

When the Covid-19 pandemic dried up trade and gambling revenues, criminal gangs pivoted to romance scams as a new source of income. These scams, where individuals are deceived into forming close relationships and sending money to online contacts, are incredibly lucrative. Recent reporting from the Wall Street Journal exposes a 3,000-mile corridor of jungle-covered mountains along Myanmar’s border with Thailand, where many of these operations are based. In compounds resembling prisons, hundreds of trafficked workers from Africa and Asia are forced to target victims worldwide. They impersonate love interests, using hyper-detailed scripts and well-tested excuses to extract money. Workers face violent punishment for non-compliance and poor performance, and escape is only possible by paying large sums to the criminals who control the compounds. A compelling story that highlights how victims might exist on both ends of a romance scam.

Read more via The Wall Street Journal: The Cyberfraud Industry Behind Romance Scams

At Trustfull , we help companies across the globe stay one step ahead of fraudsters through advanced risk intelligence delivered in real time at every customer interaction.?

To discover how we can help your business fight fraud and keep bad actors from accessing your digital services, please get in touch .