Financial Fraud and Secure Payment Methods

Laura BednarBest Practices, Fraud

Financial Fraud Statistics and Secure Payment Methods

While payment methods have become more convenient with debit cards and online banking, the risk for financial fraud has also increased. One piece of personal information can be the entry point for a cyber criminal to access all of your funds. Recent studies show that account takeovers account for half of the online banking fraud, while the other half is due to a fraudster tricking an account holder into giving them money directly.

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Statistics You Can Take to the Bank

The Federal Trade Commission tracks consumer fraud and identity theft complaints. In 2018, they found:

  • 1.4 million fraud reports and 25% of these cases reported lost money
  • Consumers reported that they lost close to $1.48 billion because of fraud
  • One of the top reasons for fraud was related to payment account with over 130,000 reports

Consumers Have Many Complaints of Financial Fraud

The most common types of financial fraud schemes include identity theft, billing schemes, phishing, account fraud, card fraud, and pyramid schemes. These types of financial attacks have led to monetary losses and theft of personally identifiable information. The developments of cryptocurrency have revolutionized the idea of financial fraud with the theft of digital currency as well as physical.

Basics of Financial Fraud

Fraud and misuse of your money can happen in a variety of ways. An attacker may be able to steal your information when you open an account with a financial institution. This process may take place online or on mobile devices, and the lack of security means a cyber criminal’s dream. Another main issue lies within an attacker calling a victim directly and tricking them into making a payment.

The more cybersecurity measures taken, the more clever that fraudsters have had to become. Some have even evolved to take control of a customer’s computer or other device and manipulate a fake website showing new funds. They then ask the user to move those funds to an account that the fraudster has created. While cybercriminals are usually thought of as far away threats, Forbes states that 51% of new account fraud victims report that they know the attacker personally.

Most Secure Payment Methods

Former con artist turned good, Frank Abagnale, named debit cards as a dangerous form of payment. The man whose life was portrayed by Leonardo DiCaprio in the movie, “Catch Me If You Can,” stated that using those cards exposes money in your personal account. The main point he emphasizes is the liability you are charged for fraudulent charges. A credit card can only be up to $50 while a debit can reach $500. This depends on the timeline in which it is reported as well. Additionally, the Nilson Report states that global card fraud losses equalled $22.8 billion in 2016. Abagnale also shys away from using personal checks because your name, address and account number are all printed on the check itself.

Payment apps and contactless payment with a mobile phone have become increasingly popular ways for consumers to pay for goods. The actual transaction is scrambled and your account information is held within the mobile app, creating an extra wall between a retailer and your information.

Solutions for Financial Protection

The biggest challenge that banks are seeing today with criminals gaining information is a lack of verification of credentials. While they check for name, social security number, and date of birth, there are few other forms of verification even though the digital world is where much information is stored. If a criminal can gain information, they can have a new card sent to them.

One solution is to implement account monitoring for the first few months after opening a card account to ensure there is no suspicious activity. When using a website either on a desktop or on a mobile device, check to make sure the connection is secure. Make sure the site is legitimate and not a look-alike created by a mal-intentioned hacker. Finally, if you suspect you have been a victim of fraud, call our team at Secure Forensics. Our examiners will find when a scam took place and the perpetrators behind it. Call us at 1-800-288-1407.