COVID-19 having a dramatic impact on the economy, with more than 30 million people now unemployed in the US alone as a result of the crisis. As restrictions continue to wreak havoc on people’s lives and income, many more individuals from traditionally economically stable locations will be lured into cybercrime. Organized fraud thrives on chaos and in tough economic times, the financial incentives behind fraud are at their highest.
Additionally, with dramatic, overnight changes in consumer behavior, it is all the more difficult for fraud prevention systems to differentiate between good and malicious behavior. Restrictions have led to a major increase in the number of people working from home, transacting online, and communicating virtually, resulting in a massive spike in online interactions.
New avenues for fraud
Governments are pumping billions of dollars of stimulus payments into the economy, which has led to a new avenue for fraudsters to target. There has also been an uptick in phishing and social engineering scams taking advantage of the collective anxiety caused by COVID-19. Significant numbers of elderly customers have been forced to rely on digital interactions, sometimes for the first time, and this makes them especially vulnerable to scams. Government agencies and health organizations have been prime targets for impersonation due to their perceived authority.
Fraudsters have been quick to capitalize on the economic uncertainty, luring previously legitimate workers into cybercrime. For example, there was a sharp spike in human-driven fraud in Italy and Peru in the immediate aftermath of social isolation and lockdown measures being imposed.
Arkose Labs has seen a sharp rise in fraud across the network since the start of the pandemic, with payment attacks up by 49% compared with the previous quarter. 26.5% of all transactions across the network during Q1 were fraud attempts and this is expected to continue to grow as the crisis deepens.
Guns for Hire
The crisis has led to shifting patterns in human-driven, sweatshop attacks – with a move away from traditional fraud hubs to a distributed model of ‘guns for hire’. There was a big dip in the proportion of sweatshop-driven attacks due to early lockdowns across Asia where fraudsters and legitimate businesses alike embraced new work-from-home guidelines.
Fraudsters are well-practiced at adapting to the shifts in consumer behavior and anti-fraud technology. This has enabled them to stay ahead of fraud prevention measures, over-burdening in-house teams, and maximizing their profits. The chaos and economic hardships caused by COVID-19 make the economic incentives for prospective fraudsters higher than ever. This will escalate as unemployment rates soar and savings dwindle. Cybercrime rings have been quick to capitalize on this, expanding their operations far beyond traditional fraud hubs such as Russia and the Philippines. This is expected to have a long-lasting impact on the fraud landscape. Businesses must act quickly to safeguard their customers and secure their futures.
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