Fight against fraud by check and payment platform


DataVisor - Digital Fraud - June 2022 - A Closer Look at Defensive Measures Against Check and Digital Payment Fraud

Digital payments are taking the world by storm, with their total transaction value expected to reach $8.5 trillion by the end of this year.

Gone are the days when electronic payments were solely the domain of large corporations via wire transfers, with peer-to-peer (P2P) payment apps such as Cash App, Venmo and Zelle becoming a staple of smartphone home screens. However, many people still rely on paper checks, especially members of older generations, for whom the use of smartphones and e-commerce is less prevalent.

Regardless of an individual’s payment preference, there are always executives of fraudsters who seek to intercept payments or exploit the personal data attached to them. Nearly half of all consumers in the United States said they had been victims of payment fraud in the past, with bad actors deploying a staggering variety of techniques to steal money or data. Consumers look to businesses to protect them from these fraudsters, and organizations deploy an equally diverse array of defenses to fend off these attacks.

This month, PYMNTS examines the methods fraudsters use for check and digital payment fraud. We also explore the most effective defensive measures to stop them.

Fraudulent payment methods

Check fraud is as old as checks themselves, so fraudsters have had plenty of time to hone their techniques. Stolen and altered checks are among the most common methods, with bad actors stealing checks through the mail, possibly changing the amounts and then cashing them. Other malicious actors make color copies of checks after altering the information to make it less obviously forged, while others have access to corporate check printing software and can hijack by printing checks themselves. checks. A new trend is called check washing: bad actors steal checks, erase recipients’ names with household cleaners, then print their names on the checks and cash them. This method can be difficult to grasp on the payer side because the amounts have not been changed.

The growth of P2P payment apps has also contributed to a new wave of fraud that is, in many ways, the online successor to check fraud. One of the most prevalent threats faced by payment application users is account takeover. Fraudsters take control of accounts and use them to access credit card data, dump stored account values, or even pay themselves or their other accounts. Cybercriminals gain access to user accounts in several ways, including through phishing and brute force botnet attacks. Yet one of the most common ways is to buy stolen credentials online in bulk.

Other fraudsters forego infiltrating accounts in favor of tricking payment app users into paying them directly by posing as trusted friends or authorities. These scams have become more sophisticated as app users become more aware of the threats, with fraudsters becoming more creative. The Better Business Bureau has warned digital wallet users of a new scam in which users are receiving messages from scammers demanding the return of ‘accidental’ payments made to their accounts – these payments are actually the proceeds of credit cards stolen. The users return the money in good faith, but at that time the scammers replaced the stolen credit card information with their own. The stolen money goes to the scammers’ accounts, and victims of accidental payments suffer a net loss of those funds when the original cardholders report their cards stolen and request a refund from the apps.

Fight against payment fraud

Consumers believe it is the responsibility of their banks to protect them from fraud, but right now they think the banks are letting them down. A recent study found that 22% of respondents in the United States said they were not confident in their bank’s ability to handle suspicious activity, yet 25% spend less than an hour every year checking to see if their accounts are fraudulent.

Biometric security methods hold some of the most promise for preventing financial fraud, and customers are also widely willing to use this method. A recent PYMNTS study found that 71% of account holders would support biometrics to authenticate their identity, 49% support fingerprint scans, and 44% open to using facial scans.

Passwords are perhaps the most common method of authentication, but their effectiveness has recently come under serious doubt. Studies have shown that 51% of consumers have difficulty remembering the passwords they use at work and at home, and 60% are unable to remember the passwords they need in their daily lives and resort to writing them down or recycling them, which compromises security in both cases. Biometrics, on the other hand, require no memorization, nor can they be guessed by fraudsters.

Deploying more secure authentication methods such as biometrics could prevent payment fraud, especially as payments become more digital. Banks face the challenge of protecting the customers who rely on them.

DataVisor - Digital Fraud - June 2022 - A Closer Look at Defensive Measures Against Check and Digital Payment Fraud


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