Are cashless payments leading to skyrocketing fraud?


A recent report by NICE Actimize has found that the rise of payments fraud is a growing concern for financial institutions and consumers alike.

The 2023 NICE Actimize Fraud Insights Report delved into the banking and payments landscape and uncovered the most pressing threats and patterns impacting financial institutions.

The report was created by analysing billions of banking and payments transactions representing over $110 trillion in value.

NICE said, “Fraudsters are becoming increasingly sophisticated, shifting their tactics from traditional account takeover and unauthorised fraud to more complex authorised payments fraud (scams). This not only complicates the fraud threat landscape, but also puts FIs at risk of double loss scenarios – both first-party and third-party victims.”

The report indicated that from 2021 to 2022, attempted fraud transactions skyrocketed by 92% and attempted fraud amounts soared by 146%.

This trend highlights two key points. First, there is a dramatic increase in overall transaction volumes and second, fraudsters are becoming bolder and targeting higher fraud amounts.

The report also stated that fraud is not limited to one specific channel; it’s a complex, multi-channel threat that is shaped by digital transformation, changing consumer behaviours and shifting fraud patterns. The report also estimated that the absolute amount of Attempted Authorized Payments Fraud overtook Account Takeover Fraud amounts with a 45.9% year-over-year increase from 2021 to 2022.

The NICE report also indicated the Money Mule-related fraud is a leading challenge facing financial institutions. Money Mules are a key element in authorised payments fraud and scams, new account fraud, and in moving illicitly obtained funds.

The data from the report found that 59% of new account fraud is mule related, and the majority of these accounts demonstrate mule characteristics within 30 days, indicated that fraud is being conducted almost instantly.

NICE Actimize CEO Craig Costigan said, “Fraudsters are leveraging faster payments innovation to conduct sophisticated scams involving money mules who transfer funds away from the FI—funds that are often unrecoverable. As the digital landscape evolves, so do fraudsters’ tactics.

“The threats identified in our report are a glaring reminder of the ever-present risk that looms over digital channels and payments. Financial institutions must fortify their defenses, and review digital channel controls, to stay ahead of new and emerging threats.”

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