Fraud and financial crime has not disappeared but rather evolved says Grozdana Maric at SAS

Grozdana Maric, Head of regional Fraud & Security Intelligence, EMEA Emerging & Asia Pacific

The COVID-19 pandemic catalyzed a digital payments revolution, forever reshaping expectations. Today’s consumers demand flexible, real-time payment options throughout their digital journeys. As banks, fintechs, retailers and other businesses modernize and add apps and offerings to keep pace, criminals’ cash in on weaknesses at every turn. How are professional fraud fighters striking back? A payments fraud study by Javelin and analytics leader SAS, titled Global Digital Fraud Trends: Evaluating The Past, Present, And Future”, explores the fraud climate in 12 countries and offers eight recommendations for curbing the deluge.

“When we look back at the last 15 years, fraud and financial crime have not disappeared but rather evolved, changing the methods, channels, and tactics. Fraud in the Middle East is taking increasingly diverse forms, in line with the global trend” said Grozdana Maric, Head of regional Fraud & Security Intelligence, EMEA Emerging & Asia Pacific. “As people spend more and more time online – including many for the first time, fraudsters are using this as an opportunity to exploit consumers’ fears and lack of knowledge. They are targeting the mobile experience and super apps that are widely used in the Middle East.”

She concluded “Digital adoption across all industries also means increase on a variety of fraud designed to take advantage of newer payment methods. While allowing customers instant access to products and services, this digital transformation has increased their vulnerability to fraud. As the financial crime and fraud risk response, more regulatory enforcement and actions have been taken. UAE Central Bank, the Saudi Central Bank and other regulatory authorities within the ME region are constantly working to enhance efforts and strengthen the awareness of licensed financial institutions to prevent all kinds of fraud and financial crime activities.”

“Pandemic digital habits shifted so strongly into card-not-present transactions, and suddenly it feels as if everyone is online, including the bad guys,” said one European fintech executive. “We are making strides in controlling payment fraud with strong authentication and machine learning, but it took some losses to gain an understanding of how important it is to plan ahead.”

“Telecom and [business email compromise] fraud are sources of serious concern for my team,” said the Vice President of Special Investigations at one US bank. “The pandemic has made it impossible to create enough fraud strategy to stay ahead because the criminals now mix multiple merchant names, MCC codes and dollar amounts in automated attacks that are hard to prevent.”

2023’s digital economy presents fresh fraud trends with global impact

In the immediate wake of the COVID-19 pandemic, the digital economy exploded. For fraudsters, the sudden surge in digital transactions and payment modalities offered countless new fraud avenues. As anti-fraud pros grappled with how to adequately protect transactions, scammers largely focused on pandemic-themed schemes and socially engineered attacks.

But the landscape has changed. In 2023, the digital economy and the “global scam economy,” as coined by Javelin, are here to stay – and they will evolve in parallel. Per the report, 2020’s schemes du jour have been replaced by scams galore: romance scams, fake home-based employment opportunities and investment schemes popular among them.

Fraud diversified by region vexes local authorities and anti-fraud pros

Globally, threats are more or less identical, though certain fraud types have manifested and grown differently by region and nation, challenging local anti-fraud pros, law enforcement and governments accordingly.

Digitally inclusive fraud strategies light the way – eight expert strategies

Among the report’s eight spotlight recommendations for combatting fraud in the digital age: multifactor authentication and account-based alerts should be considered essential, not nice-to-haves. Also paramount in the guidance is the consolidation of monitoring solutions on a single, powerful AI-driven platform.

“A carefully layered deployment of machine learning models, biometrics and contextual, supplementary tools can help financial service firms make faster, more accurate decisions that scale across all verticals,” said Krista Tedder, Head of Payments at Javelin Strategy & Research. “Solutions must be interwoven – and underpinned by shared data streams – to effectively combat the increasingly sophisticated tools and strategies we see being employed by criminals worldwide.”

“US consumers alone lost $8.8 billion to scams last year – a more than 30% jump from 2021 to 2022 – according to the Federal Trade Commission,” said Stu Bradley, Senior Vice President of Fraud & Security Intelligence at SAS. “Consumer trust in the expanding global digital payment ecosystem is an imperative – and that trust is predicated on firms making effective use of advanced customer authentication and anti-fraud technologies, including AI, machine learning and biometrics, to detect and prevent fraud across channels.”

Grozdana Maric, Head of regional Fraud & Security Intelligence, EMEA Emerging & Asia Pacific
Grozdana Maric, Head of Regional Fraud and Security Intelligence, EMEA Emerging and Asia Pacific, SAS.