Autumn alert: Emerging fraud risks for online merchants

Recent research reveals that fraudsters are continually innovating their attack methods. As we transition into autumn, is your online business adequately prepared? This article unpacks the most current trends and challenges in online payment fraud, providing essential insights to help you protect your business and sustain customer trust.

Watch out for these latest fraud trends

The Visa Biannual Threats Report for June 2023 serves as a timely guide, shedding light on the most pressing threats that online merchants should be aware of. With technology and tactics constantly evolving, understanding these trends is more than advisable—it’s essential.

#1 – Increased attacks on the authentication stage of transactions

The Visa report underscores a growing trend of attacks targeting the step-up authentication process, a critical juncture in the transaction flow. Over the past year, there’s been a significant uptick in schemes designed to bypass one-time passcodes (OTP), often leveraging phishing and social engineering tactics. This highlights the imperative for robust, multi-tiered payment security measures to mitigate these evolving threats.

#2 – Exploitation of AI technologies to commit fraud

Artificial Intelligence (AI) is increasingly being used in nefarious activities, including fraud. While AI has the potential to revolutionize various industries, it also provides fraudsters with more sophisticated tools. For instance, AI can be used to create highly convincing fake emails that appear to come from trusted sources, a tactic known as Business Email Compromise (BEC).

In simpler terms, AI is making it easier for fraudsters to execute large-scale scams that are more difficult to detect. This underscores the importance of continuous education and vigilance, both for consumers and within corporate settings, to recognize and counteract these evolving threats.

Businesses are therefore faced with the rather hard decision of whether to tolerate the late payment or pursue alternatives, which may eventually result in an organization obtaining the cash. In terms of solutions, some may appear to be more offensive than others; consequently, companies must evaluate how consumers will respond and what is the best method to retain relationships and recover the debt at the same time.

Recommended reading: How has ChatGPT revolutionized fraud methods?

#3 – The surge in ransomware attacks

The research identifies a staggering 66% increase in ransomware cases between March and May 2023 compared to the prior three months. While financial organizations and online merchants are the primary targets, the ripple effect can extend to the checkout processes, affecting customer trust and payment security. This underscores the need for robust security measures, not just against ransomware, but also against phishing attacks and malicious email campaigns that often serve as entry points for these more severe threats.

#4 – Targeting of identity data and third-party providers

The Biannual Threats Report reveals an unsettling trend: fraudsters are setting their sights on third-party service providers and supply chain infrastructure. By compromising these entities, they can access a treasure trove of payment account data from a wide range of online merchants. For those in the eCommerce space, this means that your payment security is only as strong as the weakest link in your supply chain.

Is your business protected?

As we move into the back half of the year, it’s clear that online merchants must be more vigilant than ever. With the landscape of online payment fraud constantly evolving, staying ahead of the game is not just advisable—it’s essential. And while the threats are many, the solutions are there for those willing to invest in them.

Understanding the complexities of fraud prevention can be challenging. While there are numerous strategies and technologies available, finding the right solution that fits your business needs is crucial. One such solution that has been effective for many businesses is Protectmaxx. This anti-fraud solution offers a comprehensive approach to fraud prevention, addressing a variety of fraud types. 

We’re always here to provide advice and share our expertise on fraud prevention, so feel free to contact us if you have any questions or need further information.