Federal Reserve Bank of Atlanta

03/01/2021 | Press release | Distributed by Public on 03/01/2021 08:16

Changing Fraud Strategies: Hindsight Is 2020

March 1, 2021

Editor's note: This is the first of a three-part series.

It's been exciting to see such rapid innovation in payments recently. It's also been a little frightening, when we think of how quickly fraudsters and cybercriminals capitalize on fast-changing behaviors and how slowly others may adopt mitigation strategies.

To shed light on some of the new threats and offer tips on mitigating these new threats, Take On Payments is running a series of three posts, starting with this one. This first post presents some research and other information on the threat trends and contributing factors that escalated in 2020. The next two posts highlight innovative fraud mitigation strategies.

Account takeover fraud

New account opening fraud

Online fraud

  • The U.S. Secret Service recently emailed an alert to partners about how they continue to detect a significant upsurge in e-skimming attacks . In these attacks, fraudsters load malicious codes, which are increasingly difficult to detect, on e-commerce sites to steal payment card information from e-commerce websites. Cybercriminals consider e-skimming easy and highly profitable.
  • Last month, the Financial Crimes Enforcement Network, or FinCEN, sent out a notice urging financial institutions to alert their customers about business email compromise, ransomware, and fraudulent payments that are attacking both vaccine delivery operations and the supply chains required to manufacture the vaccines. These crimes are drawing, in most cases, six-figure payouts.

Fraudsters see new payment behaviors and innovations as low-hanging fruit, a path of least resistance because sophisticated fraud mitigation tools have yet to be applied. Also, businesses and consumers who are new to digital or online commerce can be slow to adopt security best practices. So how should fraud mitigation strategies change to meet new threats? The next two posts will discuss how fraud strategies can build resistance with updates to organizational structure or expertise and innovative digital fraud prevention technology and security features.

By Jessica Washington, AAP, a payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed