Feedzai Financial Crime Report: 23% Increase in Online Fraud as Cashless Payments Take Center Stage
October 2021 by Feedzai
Feedzai has released its most recent Quarterly Financial Crime Report. The report analyzes financial crime and consumer spending trends from more than 1.5 billion global transactions from April to July this year. According to the analysis, six months into the second year of a global pandemic, consumers’ shift to digital banking has only gotten stronger. The data reveals continuous move to cashless transactions, with a 146% increase in P2P payments, a 44% decrease in cash transactions, and a 109% increase in online transactions, to nearly double the number of card-present or in-person transactions. With this focus on digital payments, financial criminals have also shifted their targets online. The number of online card fraud attempts increased by 23% in this time period.
“Cashless payments were already on the rise, but the pandemic accelerated all forms of digital transactions when lockdowns hit,” said Jaime Ferreira, Senior Director of Global Data Science, Feedzai. “Millions more people experienced just how convenient digital payments and banking are when they couldn’t go to a bank branch or a restaurant or grocery store. Cashless transactions are not the future anymore, they are today. But the convenience comes with a cost. Financial institutions and retailers need to address the financial risk and higher complexity attacks that arise with the digital evolution.”
Top Fraud Scams
With fraud on the rise, the report also identified the top five fraud scams in the second quarter of 2021. Purchase scams, a type of scam where consumers pay for products or services that never arrive, took the top spot due to the overall increase in online shopping. In another indication of consumers relying more and more on their mobile phones, smishing scams made the top five list for the first time. Smishing is the SMS version of phishing, where fraudsters send text messages to trick consumers into clicking dangerous links and sharing personal information.
The top five fraud scams were:
1. Purchase scams
2. Social engineering scams
3. Impersonation scams
4. Account Takeover (ATO) Fraud
5. Smishing scams
Riskiest U.S. Cities for Fraud
With fraud on the rise, the report analyzed fraud rates geographically in the United States to reveal the cities with the highest increase in fraud over the past year. The riskiest cities were:
1. Las Vegas (with fraud up 411%)
2. New York (up 396%)
3. Charleston (up 251%)
4. Nashville (up 193%)
5. San Diego (up 97%)
6. Orlando (up 80%)
7. Chicago (up 56%)
8. New Orleans (up 48%)
Consumer Tips to Prevent Online Fraud
The report includes tips for consumers to get some control back and avoid being victims of online fraud. Here are three tips from the report:
1. Listen to Your Bank - Banks are constantly studying and learning about the latest fraud trends. And they have a vested interest in keeping their consumers safe from fraud. Your bank’s educational resources are designed to protect you. Make sure you read/watch them and heed their advice.
2. Use Biometrics and 2FA - Enable biometric or two-factor capabilities on your mobile devices, such as facial scans or one-time passwords. Not only do these solutions improve security, they can also ensure a much smoother experience.
3. Protect Your Information - Be mindful of text messages, emails or websites designed to trick you into revealing personal information. If you receive a suspicious communication claiming to be from your bank, don’t engage. Instead, report your suspicions to the bank.