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Fraud has been a significant problem for businesses in the UK and worldwide for many years, and with criminals' use of evolving technologies, it isn’t showing any signs of slowing down.
In their annual fraud report, UK Finance stated that over £1 billion was stolen in 2023 alone. Here are the key findings from the report:
- Criminals stole £1.17 billion through unauthorised and authorised fraud in 2023, a 4% decrease compared to 2022.
- Banks prevented a further £1.25 billion of unauthorised fraud through advanced security systems.
- 76% of Authorised Push Payment (APP) fraud started online, and 16% started through phone networks.
What are the recent developments in payment fraud?
New threats to businesses are being fuelled by AI fraud, which is now very prevalent. In the June survey of 516 finance professionals conducted by payment security solutions vendor Trustmi, it was reported that 38% of participants said their organisation had been targeted at least once by AI-driven deepfake or executive impersonation attacks. However, 48% said they were unaware of how many times they have been targeted with payment fraud attempts of any type over the prior 12 months.
Different types of fraud include:
Generative AI
Generative AI can create new content (e.g. text, images, audio) and is being adopted by fraudsters for phishing, deepfakes, and automated attacks. It makes it easier to impersonate individuals or create fake websites and content and has increased the complexity and speed of fraud attempts, forcing businesses to adopt AI-based countermeasures.
Synthetic Identity Fraud (SIF)
SIF combines real and fake information to create new, false identities. They often remain dormant for years, allowing criminals to commit fraud without immediately raising red flags for traditional identity verification systems. Fraudsters build credit over time, then make large purchases or take out loans and disappear without repayment.
Fraud-as-a-Service (FaaS)
FaaS makes it easier for non-experts to engage in high-level fraud through ready-made tools available online. Cybercriminals sell pre-packaged scams, fake documents, and phishing kits via the dark web and use cryptocurrency payments to shield themselves from law enforcement. The economic losses are high and cost billions yearly, with banks, retailers, and consumers being targeted.
First-party Fraud
First-party Fraud occurs when an individual or company intentionally misrepresents their identity or gives false information to commit fraud for personal financial gain. Younger generations, particularly Gen Z, are more exposed to fraudulent opportunities through social media, contributing to the growth of fraud in this demographic. An example is falsely disputing legitimate transactions.
Cause-related Fraud
Scams involving emotional manipulation related to charitable causes or social issues trick people into sharing personal information or making payments to fraudulent entities. The impact of monetary loss on donors leads to mistrust and reputational risk of legal charities, making it harder to raise funds in the future.
Blink Payment’s approach to combating payment fraud
Security is a top priority. Blink Payment helps to protect your business by adopting the highest security practices - keeping your customers safe, maintaining trust, and limiting chargebacks. Some key features of Blink Payment that help prevent fraud include:
Open banking
Open banking is a recent innovation in eCommerce that is bringing a new force to fighting fraud. It allows your customers to send funds directly from their bank account to your business account in real-time. The entire process is cardless and no data needs to be keyed in by the customer.
Open banking's real-time funding is a game changer for all involved. Payments are instantly taken via the customer's banking app (their most trusted source), and multi-factor authentication (MFA) is required in the form of Face ID, fingerprint, or security passwords. The payments are not held up through a third-party, again limiting the likelihood of exposing sensitive banking information in cases of breaches and fraud. Payments leave one account and enter the other within seconds.
With such security measures in play, it is fair to say that open banking is more secure than paying through traditional payment methods such as card payments online.
Secure eCommerce
Blink Payment pages and payment links allow you to send unique links that enable your customers to pay within a secure online environment. Using payment links enhances payment fraud detection, in turn reducing the risk of fraudulent purchases and chargebacks. Ideal for handling large payments, your business can also brand pages to increase customer confidence.
3D Secure
Blink Payment supports 3D secure (3DS), a protocol that adds an extra layer of protection to online card transactions. With 3DS enabled, your customers are required to carry out multi-factor authentication (MFA). No payments go through unless authorised by the customer themselves, further reducing the risk of fraud and financial loss.
