Future Fraud Trends

September 29, 2022

During our first session of Fraud Office Hours, an attendee asked, "What do you think will be the future fraud trends from current economic climate?" Watch this video clip or read the highlights below to see how Unit21's Head of Fraud Risk, Alex Faivusovich, responded.

Fraud Trends Based on the Current Economic Climate

Trend 1: First-Party Fraud

"I  believe we will see more first-party fraud. I think those new fraudsters who are just entering the game are realizing that Fintech companies and crypto companies are great targets for them to use to execute their fraud schemes.

Simply because these fraudsters understand that a startup's ability to fight back will not be as robust as a traditional banking institution.

And they also realize that even if they commit fraud and they will get caught, nobody will report this type of fraud. So basically, even if I'm a fraudster, this will not appear on my credit report. So no reports will go out to the bureaus.

I think that with the 'Buy Now Pay Later' (BNPL) industry starting to query the bureaus and doing some type of soft pulls whenever they provide credit for users to use with the buy now, pay later options that they offer.

I believe that with regard to Fintech compliance, organizations in this industry will eventually, (maybe not for onboarding, but for some type of products and some type of access to products), start reporting bad actors who commit friendly fraud to the bureaus.

This is essential, and we will probably be there in the next few years.

Trend 2: Peer-to-Peer Lending Platform Regulation

In the US, we have P2P platforms that are very hard to keep track of how money moves from one wallet to another.

So, from a money laundering type perspective, in reality, you can have one person today holding dozens of wallets and just shifting money to ensure that this money 'disappears.'

We will need to see more regulation for those P2P platforms and make sure they report what they're supposed to report because I still feel like we are not in a good place in terms of monitoring P2P activity.

We need to better define who's liable for fraud on those platforms. For example, if I use Zelle and somebody scams me. Who's liable for it at the end of the day? It's still wide open, and there's a need for more regulation around those platforms in general.

Trend 3: Deepfake Technology

"Another thing I think that will trend is how fraudsters will incorporate deepfake technology into their schemes.

So if you think about it, up until now, the biggest problem with synthetic identities was that they didn't have a real-life presentment, right? So, yes. There is an identity. It's online. It might have some bank accounts associated with it, credit cards, but there's no face, right? There's no real face. And don't fraudsters don't like showing their own face and don't like putting their own faces on an ID.

They also don't like to go on Zoom calls with their real face. So I think it will be interesting to see how fraudsters will start leveraging real-time deepfake technology to orchestrate fraud attacks.

For example, if a fraudster needs to pass document verification, how do they use deepfake to do that?

If they need to penetrate a company from the inside, how can they use deepfake for that?

If they want to do some espionage, can they use deepfake to make themself look like a different person?

Questions like these are likely to be at the forefront within the next few years based on our current economic climate."

Looking for more insights? Check out our first session of Fraud Office Hours on-demand for a deeper dive into current fraud trends and which preventative measures to consider.

New call-to-action

Getting started is easy

See first-hand how Unit21
can help bolster your risk & compliance operations