Industry executives and experts share their predictions for 2021. Read them in this 13th annual VMblog.com series exclusive.
What Lies Ahead for Online Fraud and Digital Commerce in 2021
By Lizzie Clithroe, Sr. Director of Product Marketing at Arkose Labs
Along with its many other challenges, 2020 brought significant disruption to online fraud and digital commerce. And even as we attempt to return to some semblance of normalcy, many industries and businesses are forever altered. Video conferencing platforms previously only used for the occasional business meeting are now integral to everyday life, for example. Online gaming platforms once used only by a certain type of customer are now grappling with the addition of millions of new users from all demographics across the globe.
2021 is sure to bring even more change and disruption for consumers and businesses alike. In order to survive and thrive in the year ahead, an awareness of changing trends and an understanding of evolving behaviors is vital.
Below are 7 key predictions impacting a range of industries worth closely monitoring this year:
1. Digital entertainment goes mainstream. With many movie theaters shuttering due to the pandemic, more films are being released straight to digital. This trend will continue in 2021 as more people than ever before subscribe to streaming media services. Concurrently, these services will be increasingly targeted by fraudsters for account takeover attacks (ATOs), both to re-sell subscriptions and commit bonus abuse, taking advantage of new sign-up offers at scale.
Online gaming usage will also continue to skyrocket, and fraud levels will be higher than ever before as attackers monetize in-game assets and accounts. Additionally, an increase in promotional incentives designed to entice new customers will lead to an increase in new account creation, making it even easier for fraudsters to create sleeper accounts and execute a variety of abuse and attacks.
2. The on-demand economy continues to evolve. Fraudsters will increasingly use the rise in delivery services to commit scams. ATO attacks and hack attempts will be prominent due to the valuable customer information involved. Buy online, pick-up in-store programs will also continue to be a driver for fraud in 2021, so fraud teams should move their detection efforts further up the funnel and focus on the account login stage rather than at the purchase.
While hotels suffered in 2020, long-term rental services thrived. In the year ahead, fraudsters will target these companies with ATOs and stealing/re-selling reward points. Some unscrupulous operators of long-term rental sites will also falsely take advantage of government programs and loans for their own profit.
3. Digital transformation progresses unabated. Attendance at virtual conferences and webinars will double this year, as remote learning and networking become the norm. This trend will provide fraudsters ample opportunities to attack these platforms. Remote education will also become at least semi-permanent, so school districts and education platforms will need to be vigilant against fraud and cyberattacks as attackers seek to expose personal student data in attempts to commit blackmail.
Financial institutions will also continue down the path of digital transformation in 2021, thereby exposing themselves to a wide range of new attack vectors. For instance, financial institutions may need to change their loan approval models as both fraudsters and financially desperate individuals take out loans with no intention of repayment. As digital payments become more mainstream, financial institutions will also see a rise in card-not-present fraud.
4. Friendly fraud rises. Many consumers will continue to struggle financially this year, with some trying to claw back money wherever they can. Friendly fraud instances will range from genuinely innocent mistakes (i.e. a consumer doesn’t recognize a transaction), to opportunism (i.e. a consumer claims fraud where there is none). Friendly fraud can be extremely difficult to detect since it often features “normal” user behavior, so businesses will need to be able to determine the intent behind each user.
An increase in rewards programs is also likely to attract high levels of friendly fraud and “double-dip” fraud stands to escalate. This type of fraud involves a customer ordering a product that’s successfully delivered, but the customer claims it was never delivered, it’s faulty or even that they never ordered the product in the first place.
5. Misinformation thrives. Misinformation around COVID-19 vaccines will be used to power spam and phishing scams, especially those targeting the elderly and other at-risk populations. As they did in 2020, fraudsters will use misinformation and confusion around COVID-19 related stimulus checks and government programs to phish consumers. At least one election in 2021 will be influenced by misinformation spread through social media, and fraudsters will increasingly spearphish internal fraud and security personnel using sophisticated social engineering.
6. Technologies are consolidated. After years of operating with complicated tech stacks, companies will consolidate their technology to incite operational efficiency, quicker time-to-market and better user experiences. In addition to the efficiencies and cost savings derived from reduced licensing costs, the centralized storage, reduced downtime and quicker disaster recovery capabilities of technology consolidation will be critical as businesses cope with a widely distributed, remote workforce.
7. Human behavior is unpredictable. This year, fraud prevention teams will struggle with “split personality” customers, i.e. customers who are genuine customers on one site and committers of fraud on another. This unpredictable behavior will make it difficult for some fraud prevention systems to distinguish between good and bad actors, and remote work will only create further confusion via IP anomalies and varying usage patterns.
Staying abreast of the latest online behavior patterns and commerce trends can help ensure adaptability, security and growth this year. No matter the industry, businesses should prioritize implementing proactive fraud strategies capable of nimbly evolving along with our ever-changing world. Perhaps most importantly, these fraud strategies must also be capable of retaining intuitive and seamless digital experiences for trusted, genuine customers.
##
About the Author
Lizzie Clitheroe is a cybersecurity specialist, heading up Arkose Labs’ product marketing team. In this role she delivers data-driven insights into fraud, abuse and authentication trends. 9+ years’ experience working for fast-growth security vendors spanning fraud prevention, network security and application security.
