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Fraud is no longer carried out by sophisticated criminals. It’s too easy to do. It’s far too lucrative. And most of the time there are zero consequences.
Hundreds of thousands of new fraudsters have been activated during the pandemic. Becoming a scammer is increasing in popularity with Scam-as-a-service models making it easier for people buy off-the-shelf tools that enable them to project attacks without any prior knowledge of coding. The Fraud as a Service Industry is growing exponentially as expert fraudsters and scammers turn their attention to selling their methods, services, and fraud-perpetrating-tech to others. Fraudster automation will rapidly accelerate, turning newbies into experts instantly. They may even begin to incorporate Ai to make them smarter, more targeted, and more human-like. These automated bots could include account opening bots, loan application bots, credential stuffing bots, and new hyper-realistic social engineering text and chatbots.
Bots are ushering in a new era of fraud automation: Bots create a new level of social engineering tools designed to make fraud easier for those hundreds and thousands of new fraudsters that are entering the scene. In June of 2021, OTP Bot services began to appear which completely automated the pilfering of One-Time Password (OTP) passcodes from victims with zero human-to-human interaction.
OTP bots introduce automation to what used to be a manually-intensive social engineering process. Instead of contacting victims individually by phone or SMS, OTP bots do the work automatically and at scale. This implies more account takeover (ATO) attacks and more victims. As a result, the returns for fraudsters using OTP bots are high and correlate with the volume of prospective victims targeted. The more victims targeted, the greater the gains.
Consequently, OTP bots are driving substantial losses for financial and other institutions. Several factors are driving this. First, the bot calls are skillfully crafted, creating a sense of urgency and trust over the phone. The calls rely on fear, convincing victims to act to "avoid" fraud in their accounts. Second, victims are accustomed to providing a code for authentication as it has become common practice for companies to request a verification code when speaking with a call center representative.
More Industry Insight
2023 fraud predictions.
The emotional impact of fraud.
Is fraud awareness something you want to keep managing?
How to remain consistent with your fraud awareness messaging.
FINRA regulatory notice 21-18.
CFPB reduces consumer liability for fraud.
There are a variety of fraud awareness topics that will help to educate your account holders. People need to remain vigilant in understanding how technology works. Criminals will attempt to exploit consumers through many channels, including email, SMS messaging, messaging services, and through direct calls to consumers. People are finally understanding that a cybersecurity incident can happen at any time, to anyone and that it really is everyone's responsibility to prevent it.
There is going to be a huge wave to consumer fraud as more inexperienced fraudsters use out-of-the-box tools that make it easy and with less risk. There are many topics that would help to educate consumers and you should be consistently reminding your account holders about all of them. Here are a few examples: Email Safety, Recognizing Phishing Scams, Understanding Data Breaches, Imposter Scams, Securing Home Networks, Mobile Phone Safety, Deepfake Fraud, How to Report Fraud & ID Theft, Identity Safety, Social Media Safety, Account Takeover Prevention, and the countless other methods fraudsters use to trick people into divulging their PII.