How AI and data enrichment can protect the vulnerable during a recession
Discover all the Smart Security Summit on-demand sessions here. A widespread recession, while not a certainty, looks increasingly likely in the years to come. A recent survey by Hanover Research have shown that 85% of financial leaders foresee an imminent recession. Additionally, a Morgan Stanley strategist says a recession is already underway in the world’s major economies. In short, tough financial times are coming. History shows that incidents of fraud increase during times of recession and financial shock. The data backs it up: During the global financial crisis, the Association of Certified Fraud Examiners (ACFE) conducted an investigation fraud experts. More than 55% said fraud levels had increased during the crisis. The same thing happened in the first year of the Covid-19 pandemic. Fraud in the UK found that some types of financial fraud almost doubled in 2020. Identity theft scams, involving fraudsters posing as “trusted organizations”, were a particular problem. Event On-Demand Smart Security Summit Learn about the essential role of AI and ML in cybersecurity and industry-specific case studies. Watch the on-demand sessions today. look here With a recession almost certainly on the horizon, there is no doubt that criminals are already hard at work planning ways to exploit the widespread financial scare. Some people are inherently more vulnerable to their scams, especially those designed to exploit hope and despair. So what can companies do to protect their vulnerable customers and society at large? Does technology and the intelligent use of data provide the answers? To find out, let’s first look at how fraudsters exploit vulnerable people in times of crisis. How do fraudsters target vulnerable people? As mentioned above, impersonation scams were a particular trend during the pandemic. For example: Fraudsters posed as health authorities organizing vaccines, “phishing” personal data and payment details.The scammers posed as government departments, particularly those involved in providing pandemic financial assistance to individuals and businesses. The key theme here is scams that target vulnerability. People were eager to arrange their vaccinations. Businesses were eager to get the financing they needed to protect themselves and ensure their staff were paid. Individuals were – understandably – vulnerable to acting hastily on emails and text messages that promised to solve the problems they faced. Companies already recognize the likelihood of similar scams during a recession. Experian recently offered advice on fraud trends to watch out for during a recession. The organization specifically highlighted scams that target vulnerable people and those in financial difficulty. For example, those short on cash are easily lured in by discounts, offers, and refunds. They will show interest in anything that suggests they can make extra money quickly or make a big return on small investments. People let their guard down in times of desperation – and during a recession, there’s plenty of desperation to exploit. Fraudsters have nothing to do but resort to their usual methods of choice, such as social engineering, fake employment fraud, phishing, mass marketing scams, account takeover (and more). The financial climate simply gives them an added edge of desperation that they can take advantage of. What can companies do about it? How to protect vulnerable people from fraud Businesses need to take a two-pronged approach. First, they should provide customers with the information they need to identify and avoid scams whenever possible. Second, they must have systems in place to detect identity scams, credit card fraud, and the various other exploits that can occur once criminals break through their victims’ human defenses. This is where technology and data can serve as an additional line of defense. Let’s look at each part in turn. Communication The majority of successful scams rely on the exploitation of human error and naivety. Worryingly, people are more likely to make errors in judgment during times of stress – and a recession is a major stressful time for many. A National Frontier of AARP Fraud report revealed that “specific environmental and emotional factors” can make people more vulnerable to fraud. These include going through stressful life events and having limited social and family support. With this in mind, organizations can target counseling at particularly vulnerable people. For example, those with high or growing personal debts would not only benefit from financial assistance, but also advice to protect them from scams. Virgin Media Anti-fraud tips guide is a good example of customer communication that can alert people to the type of scams they may encounter. Each customer who does not click on a link, respond to a text message or reveal details following a phone call from a fraudster reduces the total number of successful scams. Technology and data Unfortunately, even with well-designed communication and customer education programs, scammers will still manage to extract a lot of personal information and credit card numbers from their vulnerable victims. New methods are constantly emerging, with criminals continually finding different social networks and digital channels to target. This means companies need to beef up their technical defenses to increase their chances of catching criminals red-handed. This is where AI, data enrichment and other technical solutions can pay off. Below are some examples. Data and device fingerprinting Device fingerprints gather a wide range of data that is readily available when someone logs into a website. This includes but is not limited to browser configuration, operating system, installed plugins, TCP/IP details, time zone and screen size. Analyzing this fingerprint can help a company identify when a fraudster is trying to log into a victim’s account, even if they have a password or other information obtained through phishing or by other means. If the fingerprint does not match the one usually seen by the authentic user, systems can flag the user for manual checks or additional authentication. Data enrichment Data enrichment takes a single data point, such as a phone number or email address, and intersects it with a wealth of related information. For example, scanning a phone number can reveal the network it is linked to and whether it is a genuine number or a “disposable” virtual number. Even more can be gleaned from an email address. A good fraud prevention solution can check which social networks and online accounts an email address is linked to. It can establish how long the address has been active and if it has been caught in historical data breaches. Most well-established email addresses are linked to numerous online accounts and have been victims of historical breaches. Email addresses that don’t match this profile raise a red flag. By automating these checks in online systems, digital fingerprinting with data enrichment can help raise the alarm when fraudsters use “hot” phones and “disposable” accounts. machine learning AI and machine learning (ML) are increasingly used in fraud prevention. ML can detect patterns of fraudulent behavior that humans may miss and share those patterns across multiple organizations. ML can be particularly useful when monitoring login behavior, which can help detect account takeover fraud. The technology can also spot patterns in popular items intended for purchase by fraudsters. All of these methods can be extremely useful as an extra line of defense when certain vulnerable people unwittingly (and unavoidably) provide criminals with personal data to work with. Look forward Fraud is on the rise, even absent a recession that will see criminals work even harder to target the desperate and vulnerable. The damage is profound and goes well beyond the financial. A recent Which report found that 63% of fraud victims reported an “adverse effect on their mental health,” with 39% also feeling the effects on their physical health. In these difficult times, vulnerable people need protection. Technology does not offer a complete solution, but it is part of it – and can reduce financial losses not only for individual victims, but also for the businesses that serve them. Conclusion Despair breeds despair in times of financial crisis. Criminals know exactly which emotional buttons to press to make potential victims more vulnerable to their scams. The possibility of a loan, a prize, a refund or whatever makes life easier will always be attractive to someone who is struggling financially. Communication around the risks is helpful, but fraudsters work hard to make their text messages, phishing emails, and other approaches sound legitimate and convincing. Technology and smart use of data can go a long way in catching cybercriminals and their scams. PJ Rohall is Head of Fraud Strategy and Education at SEON Fraud Fighters. DataDecisionMakers Welcome to the VentureBeat community! DataDecisionMakers is where experts, including data technicians, can share data insights and innovations. If you want to learn more about cutting-edge insights and up-to-date information, best practices, and the future of data and data technology, join us at DataDecisionMakers. You might even consider contributing an article your own! Learn more about DataDecisionMakers
