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Thursday, July 1, 2021

COVID created 'perfect storm' for fraudsters

The COVID-19 pandemic forced a lot of changes in the way merchants sell and consumers buy. This, in turn, created a “perfect storm” of opportunity for fraudsters. Evidencing this, the digital trust company Sift said it saw 59 percent in blocked, user-generated malicious content within its network of clients during the first quarter of the year.

Sift just published its Q2 2021 Digital Trust and Safety Index report, which describes how “weaponized content” is moving the fraud economy forward and how consumers are reacting.

“Unexpected consumer behavior and disruption to business-as-usual were hallmarks of e-commerce throughout the pandemic," the report stated. "Market fluctuations created vulnerabilities that many businesses had never faced, but that fraudsters were quick to exploit. As the world reopens, cybercriminals are adapting their methods faster than companies can adopt defenses—and the fraud patterns that emerge throughout 2021 will forecast the shape of things to come in a post-pandemic market.”

Fraudulent content proliferating

Better than one in four (27 percent) of consumers surveyed by Sift reported running across fraudulent content on a daily or weekly basis. The most common fraudulent content encountered were spam and scams, with misinformation and "fake news" rounding out the top three types of fraudulent content encountered.

And as these attacks proliferate, consumers are becoming ever more wary and unforgiving, Sift reported. In fact, 56 percent of those surveyed said they would stop using a business website if fake or misleading content were discovered; 54 percent said they would bolt if they were scammed into sharing personal information.

Scams—essentially any content created and used in frauds, such as listings for products that are never shipped—are the foundation of the fraud economy. This global, interconnected network of online abuse hinges on conning consumers, and fraudulent content is the go-to vehicle for spreading fake information, committing financial fraud and conducting phishing attacks, Sift wrote. Specific examples include phishing and spam, marketplace fraud, employment scams, payment fraud, and account takeovers.

“User-generated content is a key engagement driver for online businesses, and many, like community and marketplace sites, depend on user-to-user interaction,” said Marc Olesen, Sift’s president and CEO. “Yet with scams making up more than half of malicious user-generated content detected on Sift’s network, consumers have grown wary of these types of attacks, and they clearly demand that businesses proactively protect them against fraud perpetrated by illegitimate users.”

Merchants in the crosshairs

The pandemic has propelled fraudsters. “COVID-19 presented the perfect storm for fraud, leading ecommerce merchants to shift in ways that, unfortunately, fuel more sophisticated and widespread fraud attacks,” said former fraudster and risk expert Alexander Hall.

“For the foreseeable future, merchants will sit in the thick of this exploitation,” Sift researchers noted.

Marketplaces are top targets of fraudsters, allowing them to manipulate both buyer and seller accounts to maximize profits. Typically, crooks deploy fraudulent content as the first step in a larger fraud operation. With just one fake listing they can create a chain of phony posts, use stolen data across the marketplace, and/or sell victims’ personal data on the dark web.

Sift reported that its team identified a card-testing ring on a popular marketplace last year. Earlier this year they spotted a scheme on Telegram’s public chat forums where fraudsters were making food and beverage orders using stolen payment information. More recently, they uncovered a sophisticated fraud ring using guest checkout options on donation sites to launder stolen payment information. “With online giving spiking by more than 20 percent since Covid-19 hit, it’s no surprise – criminals always follow the money,” the report noted.

Bottom line: static and reactive approaches to fraud detection are no match for criminal pursuits in today’s expanding ecommerce universe, Sift concluded.

end of article

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