Payments fraud was already rising, and now experts predict increased online usage brought on by stay-at-home orders will only exacerbate the trend. While losses haven’t shown up yet, e-commerce activity taking place now is sowing the seeds of a dramatic jump in the coming months. “Fraud is always a trailing activity,” notes David Mattei, a senior analyst at the Aite Group, a Boston-based consultancy.
One client, a financial institution, has already flipped its fraud-loss forecast for the year from an 8% drop to an increase ranging from 10% to 15%, Mattei says. “Other financial institutions shared the same sentiment,” he says. In some cases, “they’re already starting to see an uptick,” he adds.
Faked applications online for credit cards and personal loans are swelling in volume, too. Mattei says one institution is seeing a 5% rate of such applications, compared to a historic rate of 1.5% to 1.8%.
One tactic Mattei is watching is so-called human farming, in which criminals hire humans to use stolen credentials to break into existing accounts or to create fake accounts. Fraudsters have been relying on bits of code, called bots, to do this work, but are now finding human activity is often harder to detect. In terms of hits per day, Mattei says one fraud-measurement firm saw human-farming activity rise approximately 70% from late February to late March.