Fraud risk is increasing as the cost-of-living crisis bites globally. It is a trend that has risen since millions of workers were sent home to work in 2020 as the pandemic spread.
From 2021-2022, attempted fraud transactions rose by 92 per cent, according to an extensive analysis of $110 trillion worth of data by Nice Actimize. In addition, attempted fraud rose by 146 per cent in the same period.
It found that both the volume and sophistication of attacks increased. “Fraud is not limited to one specific channel,” the report said. “It’s a complex, multi-channel threat that is shaped by digital transformation, changing consumer behaviours, and shifting fraud patterns.”
Scammers
In the UK, for example, scammers are targeting households – practices which were already up by 14 per cent by the end of December last year. The charity Citizens Advice said that around three-quarters of people in the UK have been targeted by a scammer in the past year. Banking, online shopping and fake investment advice all ranked highly – as did delivery service scams and people pretending to be government officials.
Those working from home are also vulnerable to attack. A poll of 500 medium-sized businesses found that 78 per cent said crime had gone up with staff working remotely. Nine in ten firms said they experienced fraud loss – the average amount was almost £220,000, according to a report in This is money.
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In fact this March, the Financial Conduct Authority (FCA) wrote to the firms it regulates to tell them they needed to do better – especially during the current financial squeeze.
“We remain concerned that many payments firms do not have sufficiently robust controls and that as a result some firms present an unacceptable risk of harm to their customers and to financial system integrity,” the letter said. “We consider that the risk of customer harm is heightened by the tightening economic conditions and the cost-of-living crisis.”
Over the past two years, the regulator said it had identified specific risk management failings at financial institutions in relation to financial crime.
For example, it said that business-wide risk assessments were often not supported by a robust methodology. And firms failed to regularly review and refresh risk assessments and control frameworks to take account of the evolving risk landscape.
