Fraud rates in the US are on the rise; In fact, the US is speculated to be the most prone to credit card fraud on a global scale. Since the pandemic began and companies started moving their business online, the number of internet crime complaints have risen, with digital fraud attempts soaring 25% YoY in Q1 2021.
Why is the US a target for cyber fraud?
One of the major reasons the US became a target for digital fraud stems from the Covid-19 pandemic. While the pandemic pushed businesses across the globe to provide their goods and services online, the US experienced a particularly steep boom, experiencing 10 years’ growth in just 3 months.
Prior to the pandemic, US e-commerce adoption was fairly slow; despite being the second largest e-commerce market in the world, under 9% of retail sales could be attributed to online shopping. Therefore, when the pandemic forced consumers to predominantly shop online, many e-commerce merchants were not prepared for the digital shift, digital onboarding, eKYC and the impact on fraud, much less well prepared with eCommerce fraud prevention tactics.
US cyber fraud statistics
- Almost 90% of organizations were victims of a cyber fraud attack within a 12-month period
- Nearly 80% of organizations had to deal with ransomware attacks in 2020
- The largest percentage of mobile Trojan ransomware attacks occur in the US
- Over half of all US organizations were victims of ransomware in 2021
- 250,000 devices were victims of stalkerware in 2021, with 86% of adult users being unaware of its existence
- 75% of organizations were victims of a phishing attack in 2021
- The cost of data breaches average over $9 million in 2021
- The US Government has allocated over $15 billion to cybersecurity spending
The increase in cybersecurity spending
After the recent Colonial Pipelines attack, POTUS Joe Biden announced a directive with a focus on cybersecurity. Following this, the US government proposed increased cybersecurity budget allowances. The statement urged both government agencies and private sector companies to boost their cybersecurity defenses to be more in line with CISA guidelines.
US sectors affected by cyber fraud
Online grocery delivery sales
The pandemic gave rise to a whopping 300% jump in US online grocery sales; while great news for ecommerce grocery merchants in terms of sales, this boost put immense pressure on ecommerce fraud prevention teams.
Online gambling account takeovers
Sports betting and online gambling underwent a boom when 21 states legalized sports betting at the beginning of the pandemic. The American Gambling Association expected a 63% YoY growth which brings with it an increased fraud risk.
Over 50% of gambling merchants in the US saw an increase in account takeover fraud, with this number expected to rise.
Ecommerce, unemployment and credit card fraud
As unemployment numbers became very volatile during the pandemic, people started turning to friendly fraud. Friendly fraud is when a consumer dishonestly files a chargeback claim in order to exploit merchant policies for financial gain.
Social media fraud
Having one of the highest global social network penetration rates, over 70% of Americans have a social media account. Since the pandemic started, social media usage has risen, and along with it, social media fraud such as romance scams.
The US vs the world
The PSD2 directive and widespread implementation of strong customer authentication is well underway all across Europe, aiming to reduce fraud on EU cards. Unfortunately for US cards, this means that fraudsters will be shifting focus to them; organized cybercrime is incredibly hard to detect and prosecute.
Unfortunately, the US as a financial market lags slightly behind Europe with regards to payment technologies and regulations. Take the example of the chip-and-pin technology adoption. The technology significantly reduced in-person fraud rates, while in the US, card-present skimming and counterfeit fraud was still prevalent for a long time.
By the time chip-and-pin cards debuted in the US, fraudsters shifted gears to card-not-present fraud which significantly impacted merchants.
Merchants need to keep in mind that fraud is on the rise globally, with fraudsters starting to turn to the US more and more. In order to eliminate fraud, US merchants need to pay attention to cybercrime trends and move accordingly.
Global spending on cybersecurity is expected to cross $1 trillion cumulatively over 5 years, which means organizations need to start considering cybersecurity as an integral part of their organization.
Over 60% of small and medium businesses (SMBs) experienced at least one cyber incident in the last two years; unfortunately they are in a much tougher position financially and structurally to respond to these threats.
The cybersecurity job market has over 500,000 unfilled positions, indicative of the huge gap in the rising number of fraud cases and an organization’s readiness to respond to them. A lot of companies however are combating this with increased R&D and spending in artificial intelligence (AI) and machine learning (ML) fraud prevention methods.
How LoginID helps combat fraud
LoginID's FIDO2 passwordless authentication solution reduces the vulnerabilities of traditional authentication and payment verification methods. The technology shifts away from legacy methods like passwords that can easily be stolen and misused through phishing and keylogging attacks, and moves towards more secure FIDO2 biometric authentication, biometric identity verification and biometric digital signature technology.
LoginID’s strong customer authentication solutions work for both web and mobile domains and transactions, thereby empowering you to offer your customers flexibility and convenience. It is easy to integrate without compromising regulatory compliance and security.
Get started by getting in touch with our experts today at sales@loginid.io. Or you may also register an account to get immediate access to LoginID's passwordless authentication solution.
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