Money is a necessity. While most people care about building wealth and financial security, others are more concerned about stealing them.
It is now easier to send and receive money digitally via mobile devices. But, it is also a profitable opportunity for scammers.
Many people answer ads to make money online. After submitting their information, they are added to a list and will likely be bombarded daily with emails promoting one or more programs.
There are legitimate money makers that help people become wealthy. However, several scams try to steal people's money, claiming they care about people's interests at heart.
Financial Scams
A financial scam is when a victim gives away their money in exchange for higher investment returns. These scammers might try to convince victims to part with their money by promising them investments that offer high returns and low risk (almost guaranteed returns).
These fraudsters use sophisticated techniques to convince people to invest in these scams. They make it sound legitimate to obtain personal or financial information, and they use illegal methods such as:
- Phishing Scammers use this tactic to send an email posing as a financial institution to ask the user to click on a link and update their account information.
- Social Media Scams Investors are often marketed by fraudsters using fake news stories and advertisements. Consumers are tempted to invest and lose their money.
- Identity Theft Depending on the amount of information they have, scammers make unauthorized charges on their victim's debit or credit cards. Scammers may have access to Social Security numbers, birth dates, and other personal information, allowing them to open new accounts under their victim's name.
- Phone Scams Scamming phone calls is another popular tactic. Scammers pretend to be from the government, such as the Internal Revenue Service or local law enforcement agencies. They use scare tactics and steal account numbers and personal information.
Financial executives are at the forefront of combating financial and accounting fraud. They adapt as the circumstances change. However, the COVID-19 pandemic has unleashed many forces that make fraud more difficult to fight, including remote work, global supply chain security changes, and hundreds of billions of dollars in government assistance flowing into corporate coffers.
Scammers Target the Elderly
According to Idaho News, more than 6.2 million Americans were projected to have some form of Alzheimer's disease in 2021. Many need some memory care. As a result, financial elder abuse and fraud are increasing.
Recent research also suggests that financial abuse is a problem for almost 40% of Americans over 65. Financial abuse can be considered a form of family violence. It includes withholding money, controlling household spending, or refusing someone to be included in financial decisions. Anybody can be a victim of financial abuse, especially the elderly. Joshua Reams, an attorney for Ahrens DeAngeli law, says that financial elder abuse in America is rising. The Better Business Bureau also reports that scams against adults 65 and over are on the rise.
Rise of the Cybercrime Cost for Financial Services Firms
Financial services companies are more likely to be attacked by cyberattacks than any other business. According to Accenture and Ponemon Institute, the cost of containment continues to rise.
The report “Unlocking Cybersecurity Protection” examines the cost of responding to cybercrime incidents. It also uses a costing method that allows for year-over-year comparisons. The study found that cybercrime costs have increased to $18.5 million annually, 40% higher than the average cost per firm of $13 million across all industries.
A malicious insider attack is the costliest type of attack that financial service firms have to deal with, at $243,000 per attack. It also takes the longest time for firms to resolve, at 55 days on average -- considerably longer than the time it takes to combat ransomware (34 days) or web-based attacks (26 days).
Digital Wallet Complaints
According to a U.S. Public Interest Research Group (PIRG) report, consumer complaints regarding mobile payment apps and digital wallets have increased as Americans abandon cash. Between April 2017 and April 2021, the Consumer Financial Protection Bureau received 9,277 complaints about "mobile or digital wallet."
In April 2021, there were 970 digital wallet complaints, nearly twice the number of digital wallet complaints than in July 2020.
The report examined complaints about digital wallet products of companies and third-party digital wallets that access bank accounts. Most complaints were directed at a few platforms, two-thirds of which focused on three companies: Square (the owner of Cash App), Paypal (which owns Venmo), and Coinbase. With 4,431 complaints between April 2017 to April 2021, PayPal had the most digital wallet complaints.
According to PIRG's analysis, the three most common complaints involving digital wallets in 2021 are:
- Problems managing, opening, or closing accounts.
- Issues of fraud or scams.
- Matters with transactions, including unauthorized ones.
An unauthorized transaction is a payment made without the user's knowledge or permission. If the user presses the "ok" or "send" button on the app but does not receive the service promised or finds out the payment was to the wrong person, that is a scam situation. But since the user technically said "yes" to the transaction, the user is liable for the money taken from the account.
Increasing Scams in Cryptocurrency
Crypto scams have been the trend of the year in the world of financial fraud.
Cryptocurrency enthusiasts often meet online to discuss the topic. Scammers have made it easy to make claims about cryptocurrencies that seem plausible, as they have increased in value.
Based on a Federal Trade Commission (FTC) report, complaints regarding fraud related to cryptocurrency have increased exponentially in recent months. More than 7,000 people reported scams involving digital assets between October 2020 and May 2021. It represents a twelvefold increase in complaints and a 100 percent increase in reported losses compared to the same time last year.
eKYC for Virtual Banking
Virtual banking is a huge task, and not every bank will be successful. It opens up the possibility for modern-day fraudsters, requiring banks to streamline the digital onboarding process while preventing fraud.
Experian's 2019 Asia-Pacific Global Identity and Fraud Report found that half of the businesses surveyed in Asia-Pacific experienced increased fraud losses in the past 12 months due to account origination and account takeovers.
Full-stack eKYC solutions can provide orchestration and artificial intelligence (AI) to reduce manual costs and comply with anti-money laundering regulations. They also detect fraud quickly and accurately, simplify the customer experience, and help to reduce account abandonment.
Embracing the Passwordless Approach
Passwords, despite their weaknesses, are still widely used. Legacy passwords that are easy to guess and can be reused often are susceptible to many attacks. They also do not provide adequate security for sensitive information and systems.
Passwordless authentication eliminates the need to use weak passwords, offering both benefits for users and organizations. It eliminates the need for customers and users to remember passwords. It is not necessary to store passwords to improve security, prevent breaches, and reduce support costs.
Touch ID, a biometric authentication method that allows businesses to go passwordless, is widely used in mobile banking apps and is being integrated into enterprise and customer applications. However, Touch ID alone still has certain vulnerabilities.
There are also passwordless knowledge options, such as one-time and pattern-based password methods like Fast Identity Online (FIDO) Universal Authentication Framework (UAF), which enable passwordless authentication to a person's device.
LoginID is a leading provider of FIDO2 biometric protocols that disrupts the authentication and identity verification market. It is a FIDO/FIDO2-certified passwordless authentication company that provides a SaaS-based Strong Customer Authentication Solution, Digital Onboarding, Digital Identity Verification, and eKYC solutions.
Businesses can reduce the risk of falling for financial scams by using LoginID's financial scam prevention services. End-users can have the assurance that they can securely log in to any LoginID-integrated platform.
To learn more about how LoginID can equip businesses with the necessary fraud prevention tools, get started by registering for a free account.
Visit LoginID's page here to know more about its FIDO2 biometric authentication.
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