Coronavirus has given fraudsters more opportunities than ever to cheat consumers out of their money. As 2021 begins and the pandemic continues with another national lockdown, we look at the fraud trends to watch out for in the year ahead.
1. Authorised Push Payments (APP)
APP fraud – where fraudsters trick you into forwarding money from your account to theirs – cost consumers more than £207 million in the first half of 2020, according to UK Finance, the trade body representing financial firms.
According to experts at GBG, a company that specialises in identity data intelligence, APP is highly effective, trending upwards and may be the biggest threat to consumers in 2021.
Gus Tomlinson at GBG explains: “Imagine a fraudster hacks your information and then, when you go to make a significant payment for a deposit, say, you are phoned or emailed by the fraudster who gets you, as a willing victim, to voluntarily transfer the money – but to the wrong destination account.
“We always think organisations check the identity of consumers to stop fraud, but it is equally important for consumers to be certain of what they are doing before they take any action.”
Homebuyers looking to take advantage of the Stamp Duty Land Tax (SDLT) holiday that ends on 31 March should be especially vigilant when moving money. UK Finance advises buyers to always follow-up on emails asking for personal financial information with a phone call to the alleged senders.
2. Account takeover
Account takeover is essentially online identity theft. It involves criminals who pose as you to gain access to one or more of your accounts, and then use that access to carry out unauthorised transactions.
For example, a fraudster could get into your current account using stolen credentials and use it to make transfers to other accounts. They may also change your account details to lock you out or cover their tracks, while some criminals will sell access to your account on to other fraudsters.
Payment fraud solutions company Sift calls account takeover the ‘fraudster’s weapon of choice’ and says attempts rose 282% between 2019 and 2020.
Using biometric security such as Touch ID on Apple’s iPhones or the equivalent fingerprint locks on Android devices can make things more difficult for fraudsters and provide you with a layer of defence against account takeover fraud.
3. New account fraud
Like account takeover fraud, criminals will use stolen credentials to open new accounts in your name. For example, a fraudster could get hold of your personal information on the dark web before using it to bypass identity verification checks and open a new loan account.
According to American risk-management specialist RSA, almost half (48%) of all fraud involves accounts that are less than 24 hours old.
It is important to be extra vigilant with your personal information, whether that be correspondence your put in the bin or data you enter onto a website. Documents should be shredded if possible, and you should check the authenticity of any site before providing personal information.
Experts also recommend you take care when posting information on social media, as a skilled fraudster could populate a fake profile using photographs and other details you provide.
4. Transaction fraud
This kind of fraud sees fraudsters making purchases with stolen payment information. The information is typically gained via phishing attacks that trick consumers into thinking they’re dealing with a trusted company and willingly sharing the details with a fraudster.
With more of our everyday lives playing out online because of coronavirus and stay-at-home orders, transaction fraudsters have more opportunities than ever to con those who let their guards down.
The best way to protect against phishing attacks is to check emails that claim to be from reputable senders carefully. Inspect the URLs behind hyperlinks by hovering over them with your cursor and be suspicious of emails that contain obvious spelling errors.
If contacted by phone, never share personal financial information with the caller. Instead, telephone the company using its official contact number to verify the call.
5. Synthetic identity fraud
Synthetic identity fraud is sophisticated, relatively new and is the fastest growing financial crime in the United States, according to management consultancy firm McKinsey.
It sees criminals creating entirely fictional personas using a blend of personal information stolen from genuine people and invented details to fill out the gaps.
For example, a synthetic identity could use your genuine address to pass an organisation’s identity checks, but with an entirely fake name. The fraudster will then use the fake identity to open accounts and carry out transactions.
Technically there is ‘no victim’, since the person named on the account doesn’t exist, but the use of your address, for example, could have a harmful effect on your credit file.
This kind of fraud is difficult for businesses to detect and prevent, but you can limit your chances of enabling synthetic identity fraud by using strong passwords and biometrics while being vigilant against phishing attempts.
Top tips for staying safe
Consumers can’t rely on businesses to keep them to completely safe. Here are some practical steps you can take to reduce the chances of falling victim to fraudsters in 2021.
- Check your credit report regularly for signs of unusual activity. Credit applications often leave a ‘footprint’ on your credit file, which means fraudsters will leave a paper trail you can use to catch them out.
- Don’t use the same password for every site and service you use. Modern web browsers can generate super-strong passwords for you and even remember them for you, which means you’ll be safer against criminals and won’t have to worry about your memory failing you.
- Check website addresses to make sure you’re dealing with the genuine article. Fraudsters set up lookalike websites that look almost identical to the real thing, save for a tiny difference in the URL.
- If you’re planning on buying from a website you’ve never used before or haven’t heard of, check its reviews online and run the address through Google’s Safe Browsing tool to check for security threats.
- Consider using PayPal for purchases, as your payment details won’t be exposed to the merchant.
