January 5 • 2023
7 Fraud Predictions for 2023
Cybercrime is low risk, low investment, and high return. Not surprisingly, illegal financial gain is one of the biggest reasons for cyber-attacks. The result is a predicted USD 10 Trillion of damages by 2025. Our vision is to change that.
written by Rob Tharle, Head of Product
First, let’s look at the key areas that are going to be impacting on financial institutions, consumers and the fraudsters in 2023 before moving onto some predictions.
There is now positive momentum for consumers as regulators and governments seek to stem the financial harm of scams, by increasing the level of refunds. The UK is leading the way here, but we are starting to see positive steps in the US and EU.
Sticking with regulation, there will be more coming to the DeFi world, whether crypto, Web3 or the Metaverse. This will require exchanges and custodians to step up their fraud and financial crime systems and processes, bringing more alignment to fiat.
As regulation increases, we’ll see the traditional financial institutions (FI’s) move into this world in a bigger way, even as they block payments for retail customers to the existing crypto exchanges.
Real-time or instant payments take a further acceleration globally. FedNow joins RTP in the US (along with Zelle and Venmo), RTR (Canada) might just go live at the end of 2023. In the Middle East, the IPP (UAE) and IPS (KSA) will both ramp up. The EU mandating Instant Payments on PSPs will provide a big rise in real time in a large market.
All of these efforts make it easier for both consumers, businesses and fraudsters to move funds quickly. This makes it much harder for FIs to identify frauds without interrupting genuine payments. They also increase the worth of mule accounts that can receive payments in real-time.
On the positive side we should see passwords start to be replaced in earnest with passkeys and increasing use (at least for businesses) of FIDO Hardware keys to help prevent password data compromises and phishing.
And then there is the likely the biggest impact of fraud next year, global recession. Certainly, the UK (likely already in negative growth), US and Europe will be in recession. This will have a number of negative impacts on the fraud environment such as; increased job scams, more APP scams targeting the poor and vulnerable with fake offers of help with bills or government schemes, increased insider fraud risks as firms lay off people among others.
2023 Fraud Predictions
- Expect more of the same in terms of authorised frauds. These are working so the fraudsters will continue in the same vein. Throughout much of the world that is already experiencing authorised fraud and scams I’d expect to see ever increasing levels of sophistication as FIs controls improve.
- Mules will go into overdrive everywhere. Job scams will be huge to help increase the volume of mule accounts.
- On the technology side, expect increased use of reverse proxy phishing sites to leverage credential harvesting and payments frauds.
- Data compromises and breaches will keep on coming. This will continue to get worse before it gets better and we get proper digital identity to go along with Passkeys, so sites don’t have the data to lose as set out by Dave Birch here.
- Fintechs will start to suffer in the lending space with high levels of bust out and misrepresentation on the first party fraud side along with high levels of impersonation and synthetic ID fraud coming home to roost for example in the Buy Now Pay Later (BNPL).
- PSD3 will start to get talked about in earnest on the back of the mandating of Instant Payments and the increase fraud this will bring. Some form of authorised fraud reimbursement will be in the drafts.
- And finally, I think we’ll start to see a step up in law enforcement activity taking out elements of OCGs involved. The UKs recent clean-up of a SMS spoofing ring and Interpol arrests, will be just the start of more intelligence-led responses. The size of the losses is too big to ignore and the legal changes to support greater data sharing are coming into place.
At CYBERA we’re on a mission to stop money laundering and help protect customers from scams and other financial cybercrime. We close gaps that allow cyber criminals to thrive by sharing crime data in real-time with financial institutions, fintech, and crypto exchanges, and coordinating a global response to support customers who have become victims of financial cybercrime.
CYBERCRIME WATCHLISTTM helps support firms to reduce fraud and money laundering and meet the requirements of the CRM as part of a holistic fraud and financial crime strategy.
Financial Institutions (FIs) can check against the CYBERCRIME WATCHLISTTM for confirmed mule accounts when processing payments. For outbound & inbound payments, where there is a match on either IBAN (Account Number & Sort code) or on Name the transaction can be flagged as high risk.
At account opening and ongoing CDD, email, phone and name can be used to match to CYBERCRIME WATCHLISTTM to reduce opening new mule accounts.
CYBERCRIME COMPLAINTTM further supports by providing users with alerts of any of their accounts reported as mules directly in their dashboard.
Unlike other data sources, CYBERA is a global solution, so is well placed to support the increasing levels of cross-border real-time payments.