Emerging Fraud Trends to Watch in 2023
As we enter the second half of 2023, it has become increasingly crucial for businesses to stay informed about the latest emerging fraud trends.
With advancements in technology and the ever-evolving nature of criminal activities, fraudsters and scammers are continuously finding new ways to exploit vulnerabilities and target unsuspecting individuals and organizations.
By understanding these emerging trends, businesses can proactively implement robust security measures and strategies to protect themselves and their customers from potential financial losses and reputational damage.
#1 Rising synthetic identity theft.
Synthetic identity theft has emerged as a pervasive and rapidly growing form of financial crime globally. In this sophisticated fraud scheme, scammers construct fictitious identities by blending real and fabricated information, making it incredibly challenging to detect their deceitful activities. Recent statistics from the McKinsey Institute indicate that synthetic identity fraud currently accounts for a staggering 85% of all fraud cases.
Different from traditional identity theft, which involves assuming someone else’s identity, synthetic identity fraud involves the creation of entirely new identities using a combination of genuine and false details. Fraudsters meticulously assemble fragments of legitimate personal information, such as names, addresses, and identity numbers, and weave them together with fictitious data to establish these synthetic identities.
Detecting synthetic identity theft poses significant challenges due to its reliance on a blend of stolen and falsified information, rendering the resulting identities appear legitimate at first glance.
For instance, scammers engaged in synthetic identity theft can leverage call spoofing techniques to enhance their fraudulent activities and increase their chances of success. Call spoofing refers to the practice of manipulating the caller ID information displayed on the recipient’s phone to make it appear as if the call is originating from a different number or a trusted source.The purpose of call spoofing using synthetic identity is to deceive the recipient into believing that the call is coming from a reputable organization, government agency, or a known individual.
#2 Social engineering scam as psychological attacks.
Social engineering scams are not just ordinary acts of deception; they represent sophisticated psychological attacks designed to exploit human vulnerabilities. According to reports from LookingGlass Cyber and ISACA, social engineering remains the top analyzed attack type in 2022, further demonstrating the usefulness of this tool for scammers.
Unlike conventional hacking methods that rely on technical vulnerabilities, social engineering leverages psychological manipulation to deceive individuals and gain unauthorized access to sensitive information or resources.
These scams capitalize on fundamental aspects of human behavior, such as trust, empathy, authority, and curiosity, to manipulate victims into divulging confidential data or performing actions that benefit the scammer.
Social engineering fraudsters are constantly adapting and developing new and creative ways to gain access to valuable information, such as:
- Phishing Calls: Phishing calls are one of the most prevalent forms of social engineering scams. It typically involves the use of deceptive calls that mimic legitimate organizations or individuals to trick recipients into revealing confidential information such as usernames, passwords, or financial details.
Phishing calls often generate a sense of urgency or fear to prompt immediate action from the victim. Scammers may claim there is an issue with the victim’s account, a pending transaction, or a legal matter requiring their immediate attention. By instilling fear or a time-sensitive situation, they pressure individuals into sharing sensitive information without taking the time to verify the legitimacy of the call.
- Smishing Scam (SMS Phishing): Smishing scam, a variant of phishing, targets individuals through text messages instead of calls or emails. Scammers send fraudulent SMS messages that appear to be from reputable organizations, often using urgent or enticing language to trick recipients into divulging personal information or clicking on malicious links.
Smishing scam takes advantage of the widespread use of mobile devices and the trust individuals place in text messages, making them an effective social engineering technique.
#3 Account takeover (ATO) cases are still – escalating.
It is estimated that the global losses due to digital fraud, including Account Takeover (ATO) attacks, will exceed $343 billion between 2023 and 2027, according to Juniper Research. ATO incidents are on the rise, doubling year after year, primarily due to the increasingly sophisticated and automated methods employed by fraudsters.
In this context, mobile account takeover through SIM swap fraud has emerged as a significant concern in the realm of cybersecurity. This sophisticated form of attack targets individuals’ mobile phone accounts by manipulating the SIM card associated with the phone number.
The implications of this type of attack are significant. By assuming control of the victim’s mobile account, the fraudster gains access to incoming calls and text messages, including those containing verification codes or authentication prompts. These messages are crucial for security measures such as password resets and two-factor authentication.
With control over the victim’s phone number, the attacker can intercept these messages, bypass security measures, and gain unauthorized access to various accounts associated with the victim’s mobile phone number.
#4 Phone scams are crossing borders.
The world of phone scams is no longer confined by geographical boundaries. Scammers are leveraging technology and globalization to carry out their fraudulent activities across borders, making phone fraud trends a truly global issue. The expanding trend is evidenced by the fact that phone scams are increasingly crossing borders, targeting individuals and businesses in different countries simultaneously.
Advancements in telecommunications infrastructure and the widespread availability of internet-based calling services have made it easier for scammers to operate from anywhere in the world. They can mask their true identities and location, making it challenging for law enforcement agencies to track them down and bring them to justice. This anonymity, combined with the potential for financial gain, motivates fraudsters to extend their operations beyond their home countries.
One example of a cross-border phone scam is the Wangiri fraud, which originated in Japan but quickly spread to various countries worldwide. This scam involves fraudsters making missed or single-ring calls to a large number of phone numbers, prompting curious recipients to call back. However, these victims are unknowingly connected to premium-rate or international numbers that charge exorbitant fees, with a portion of the charges going to the scammers.
Break the Fraud Trends: Growing Need for Multi-layered Approach
The prevalence and complexity of scam trends underscore the pressing need for organizations to bolster their defenses against these evolving threats. Traditional security measures alone are often insufficient to combat the ever-evolving tactics employed by scammers. As a result, businesses need to recognize the importance of adopting a multi-layered approach to protect against various types of scams effectively.
A multi-layered scam blocking approach combines multiple layers of security measures, each serving as a line of defense against different aspects of fraudulent activities. This approach offers a comprehensive defense strategy that is more robust and adaptive, mitigating the risks posed by sophisticated phone scams.
In order to optimize fraud prevention efforts, businesses and organizations must effectively coordinate various data points, risk signals, and customer data. By consolidating and analyzing this information, organizations can formulate a unified and well-rounded response that minimizes risk, reduces customer friction, and mitigates associated prevention costs.
Stay One Step Ahead of Evolving Fraud Trends with Neural Technologies
With decades of expertise in combating fraud and scam threats, Neural Technologies has leveraged the network-based SCAMBlock solution (also known as Scam Call Active Monitoring and Blocking solution), to empower organizations in making real-time, data-driven call decisions and automatically block high-risk and highly suspicious calls before they even reach customers.
Serving as the bottom line for telecommunication service providers, our network-based SCAMBlock solution effectively enhances fraud prevention measures and safeguards customers from potential scams and fraudulent activities, by harnessing the power of AI and machine learning techniques to monitor and detect abnormal traffic from the network source.
Here are the network based and multi-layered call analytics features in SCAMBlock solution to tackle emerging fraud trends effectively:
- Real-Time SCAM / Robocall Protection: Ultimate safeguarding of your subscribers.
- Active Network Blocking Of Inbound Calls: Immediate prevention of scam calls.
- Wangiri Protection: Widen coverage of safeguarding.
- Active CLI Tagging As Warning To Subscribers: Clear alert enabling subscriber choice.
- Compliance To US FCC Robocall Mandate: Safeguard access to NANP.
- Dynamic Dashboard And Reporting: Real-time updates of scam call blocking and management
Contact us today and see how SCAMBlock works to protect your customers.
