2023 will see more fraud, experts warn

A new study, Fraud Trends 2023: What They Really Mean for Fraudsters and Your Business, published Feb. 13, 2023, by SEON, foresees escalating attacks against individuals and corporates in 2023. Bad actors are increasingly sophisticated and savvy, researchers warned, while sounding the alarm against a range of attack vectors largely driven by AI and advanced automated technologies.

Researchers additionally noted the current obsession with frictionless commerce has lowered barriers to entry for fraudsters across mobile apps and ecommerce sites. They recommended implementing cross-sector collaboration and anti-fraud machine learning and AI to mitigate these types of attacks.

Tamas Kadar, CEO and co-founder of SEON, stated the report highlights the evolving nature of internet fraud. "Clearly, fraud is growing around the world, and those committing these acts are becoming more brazen and refined in their approach," he said in a statement. "If we're not careful, nascent technologies, such as AI could be leveraged by fraudsters even more dangerously in the future."

Good, bad AI

Kadar went on to say that businesses must adopt commensurate technologies to "fight fire with fire," because the only technologies strong enough to fight AI-powered fraud are anti-fraud machine learning solutions. Early research indicates fraud managers are already beginning to rely on these systems to tackle the problems they face, he stated, adding that this approach is helping companies reduce fraud risk for both their businesses and customers.

Following are additional takeaways from the report:

• Bigger paydays: Fraudsters increased average ticket rates by 300 percent between September and December 2022, by design, as they target higher amounts of money.

• Escalating incidents: Fraudsters increased suspicious activities by 12.9 percent between October and December 2022.

• Increasing sophistication: Fraudsters weaponized advanced technologies both to disguise themselves online and attack individuals and corporates.

• Increasing use of AI: Fraudsters and business owners alike are stepping up their use of artificial intelligence, researchers found, with a 30 percent and 46 percent increase in usage rates since September 2022, according to data from SEON's two machine learning modules.

Fraud-as-a-Service catches fire

SEON researchers noted that economic headwinds are further encouraging fraudsters to act, and this continuing downturn emboldens criminals to scale up attacks by employing bigger, high-tech payloads against organizations and infrastructures.   "Following a trend first seen a few years ago, with Fraud as a Service (FaaS), fraud is about to become more accessible and, thus, even more prevalent – especially fraud that deals with getting money out of the system," SEON researchers wrote. "The reasons range from economic hardship to the ease of access to sophisticated tools and tutorials for novice fraudsters."

Researchers additionally noted the ratio of declined transactions jumped by 10.72 percent between October and December of 2022, suggesting this equates to a 12.9 percent increase in overall declines ranging from suspicious user activities to confirmed incidents of fraud.

In addition to its insights on the evolving threatscape, SEON advocates cross-functional collaboration among businesses and security firms to explore new approaches to application and internet security in the coming months.

A full copy of the report is available at: seon.io/resources/fraud-trends/

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