Will fraud be the new normal for businesses in a post-covid world?
In a post-covid world, many are finding that there is a “new normal” for online fraud, driven by changes in the workplace and worker attitudes. Many of those changes will be with us long after this pandemic is behind us. These challenges have led to a permanent increase in the obstacles that businesses face in preventing, detecting, and analyzing fraud.
The need for fraud protection won’t be changing anytime soon. If anything, fraud-related risks in a post-covid world stand to grow from here.
Fraud prevention is one area businesses cannot afford to overlook, especially as they emerge from quarantine.
Some fraud prevention challenges have spiked during the pandemic
None of the most common forms of fraud are new, but they are all on the rise as the pandemic creates a fertile environment for fraud.
Identity theft
Identity theft is the most common consequence of data breaches. This type of crime is on the rise, and fraudsters target personal data to make fraudulent charges on credit cards, open new lines of credit, or commit tax, utilities or bank fraud.
A record high of 16.7 million Americans were victims of identity theft in 2017. Although that number fell to 14.4 million in 2018, we expect to see a record-highs for this crime once we have the final tally for Covid-related fraud.
Card-not-present schemes
Experts believe that retailers will lose $130 billion in revenue by 2023 because of card-not-present (CNP) fraud. CNP fraud is when a scammer attempts to purchase goods online or over the phone without possession of the physical credit card. CNP is on the rise as an increasing number of transactions take place online.
These fraudulent transactions have been an ongoing priority for online retailers, and criminals are using increasingly sophisticated methods to take advantage of returns and refund policies, intercept packages, or resell goods purchased with stolen cards.
Supply chain fraud
Issues with output for certain product categories and supply chain disruption are creating an environment where supply chain fraud more easily goes undetected.
Common issues include fraudulent billing and misrepresentation of goods, and businesses are more likely to become victims of supply chain fraud as they seek new vendors and partners to address supply chain disruption resulting from Covid-19.
Increased Fraud Risk Is The New Normal
If you are seeing increased losses due to fraud, the great re-opening across the US and elsewhere won’t offer much respite. There are a number of drivers of online fraud which emerged during the Covid-19 epidemic that are not going away — if anything, they are growing — now that businesses are starting to re-open post-covid.
Remote work
Working from home has allowed a large number of businesses to stay open without putting employees at risk. A remote work environment changes the way team members communicate. The kind of casual office chat that would have alerted employees that something is off about an invoice won’t take place.
Switching to online processes increases vulnerabilities and could result in new weaknesses criminals can take advantage of. Remote work increases risks of employees inadvertently sharing sensitive data, or failing to notice suspicious transactions as they adjust to new workflows.
Many workers will continue to work at-home following the re-opening, out of an abundance of concern around a second-wave of Covid-19. Many experts believe that increased work-from home will become a permanent facet of employment in a post-covid world, as the lower costs and increased flexibility have overcome the resistance to this type of management for many companies.
General anxiety
Some phishing scams and malicious links prey on new anxieties. A slew of new scams are related to fraudulent shopping sites for medical supplies, fake job offers and COVID-19-related misinformation. Employees who are aware of more traditional phishing scams might fall for these new techniques.
Alas, the economic and social impact of Covid-19 could stay with us long after the virus has been eradicated. This will make employees more prone to hot-button clicks on questionable links post-covid, which can lead to their identities and payment information being stolen or compromised.
Online shopping boom
More online shopping means more online fraud.
Online orders have increased by 56% during the pandemic. More people are ordering items online to avoid crowds. Detecting suspicious transactions is harder when order volume increases.
New shopping behaviors can also create new challenges. Shoppers are more likely to order items in bulk or step outside of their usual shopping habits, causing potential false positives when flagging unusual transactions.
Covid-19 has ingrained the habit of online shopping for even the most resistant late-adopters who were holding out against the lures of Amazon. Those habits should continue post-covid, especially because Covid-19 proved to be the last nail in the coffin for many established brick-and-mortar store chains, leaving many consumers with fewer offline shopping options.
A New Paradigm for Fraud… and Fraud Prevention
The post-Covid world presents new paradigms for fraud. The response needs to be new as well.
Fraud prevention requires a comprehensive view of fraud in the marketplace, and the ability to parse the vast amount of data that this view generates.
Collective intelligence — the sharing of information across partners, vendors, and clients — is a somewhat counterintuitive approach to preventing fraud. Most IT managers were raised with the idea of never sharing data outside of their organizations.
Still, just as some aspects of fighting coronavirus itself required a collective response, the fight against fraud requires collaboration in a post-Covid world.
Shared data means more data. AI and machine learning need to augment the human response to analyze data and identify patterns. This technology can flag unusual transactions and detect things the human eye often misses due to the sheer amount of data involved.
Fraud.net offers an immediate solution to improve fraud prevention as your business reopens or returns to a post-Covid footing. Start a free trial to immediately amp up security, face new risks and deal with larger order volumes, and see for yourself if our solution makes sense for your needs.