The coronavirus has raised the risk of financial fraud across the world. Now, Featurespace, a Cambridge-based company that uses AI to detect fraud for banks and retailers, has listed the top ones to look out for right now.
COVID-19 is wreaking havoc on the world economy. From Australia announcing that it’s entered into a recession to the FTSE and Dow Jones experiencing their biggest quarterly drop since 1987, the financial impact of the pandemic is impossible to ignore. To make things worse, bad actors have rushed to take advantage of the situation.
Since the outbreak started, regulators around the world have warned about an increase in hack, phishing and ransomware attacks. The international Financial Action Task Force (FATF) is just one of the many organisations to have warned about the growing threat in recent months. Often, the cyber criminals have been using the coronavirus as a way to get access to networks or as a way to decide who to target. Hospitals, who are already strained as they deal with the virus on top of their regular work, have for instance become a prime target for ransomware assaults as the hackers expect them to pay up quickly as they cannot afford to have their systems compromised.
Yet, Featurespace believes that there are two forms of financial fraud consumers and retailers must be particularly aware of right now: click & collect and credit card fraud.
The RegTech company noted that the demand for click & collect services have increased since the outbreak of the virus. As a result, fraudsters have moved to take advantage of inexperienced retailers using click & collect for the first time.
Featurespace explained that the bad actors abuse the process by claiming they did not pick goods up in store – that someone else did. To counteract this type of fraud, Featurespace advised retailers that they need to ensure photo ID is presented to confirm the identity of the cardholder or enable customers to reserve online but pay when they come to collect their goods via contactless or chip/PIN subject to the value.
The company has also noticed a 35% jump in credit card fraud in the US, warning that the UK is set to follow. “As GDPR falls, fraud rises,” Featurespace wrote. “The increase comes as millions of Americans fail to make card payments in April (and 15 million US accounts fell into “financial hardship” programmes in April). Lenders and card issuers in the UK should learn not only from the US but also from previous recessions – we should certainly be used to them now.”
Featurespace also noticed a skyrocketing demand for faster payments as many businesses and private individuals are struggling to make ends meet as a consequence of the crisis. “Often forgotten about when talking faster payments is the operational requirements necessary to facilitate; infrastructure (TPS bandwidth), staff availability (if people can pay faster they expect service just as fast), greater pressure on IT teams due to systems always being on,” Featurespace wrote.
Featurespace raised £30m in May to drive growth, something the boss of the business argued was particularly important in the days of COVID-19. “During these challenging times, our machine learning models have automatically adapted to the shift in consumer, business and criminal behaviour,” said Martina King, CEO of Featurespace, in regards to the raise. “It is our continued focus to deliver industry-leading, fraud and anti-money laundering solutions to our customers and partners.”
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