Fraud Trends During Covid-19 & What Businesses Need to Know To Cope

The covid-19 pandemic has changed a lot of things about the way we live, how we interact with people and how we buy and sell things. As almost half the world is under quarantine, the way people interact with shoppers has switched from physical to online methods. For a lot of people online has become the only method to shop for things. 

According to Google reports, online grocery saw a 100% increase in traffic, online electronics gained 60% new visitors, and 100% for booksellers. That’s not the only sector that digital services have helped grow. Digital banking services have grown by a lot and they help customers save a lot of time and effort. Signing up for new financial services has also become easier with online instant bank account verification. However, with all these financial services, comes the chances of an increase in fraud. Mastercard reported a 690% increase in suspicious account creation and a 40% increase in high-risk purchases. As the whole world is switching to online methods, the rate of fraud is growing at an exceptional pace. 

To cope with these new types of online financial frauds, organizations need to learn as much as they can about them and how to deal with them. 

Changes in Digital Trends

Even the basic patterns of supply and demand are changing. However, after the whole COVID situation, there has been an increase in the purchase of household items that are often used to clean or protect against the virus. This means that more and more people are using items like hand wipes, toilet papers, hand sanitizers, and face masks of different varieties. The need for these items has increased and the traffic on the websites like Mercari has increased by almost double for listing. In many cases, these items are available at a price hike. Fraudsters are seeing an opportunity for earning money, they are purchasing items that are in demand at retail and constantly sell these products online or locally at a price influx. In some states, price gouging is known as a 20% or more price hike for products and services. During the Covid-19 pandemic, fraudsters are increasing the prices. 

There has been an increase in elder abuse as well as a way of getting a product without having to pay for it. Another digital trend that came into existence is the “testing of payment methods”, which is a tactic that criminals have been trying to set in the market. This is a method where a fraudster will use a payment method and increase the charge amount each time. While doing this, they may keep changing the frequency of payments and switch between the types of payments to hide their trail. Also, the scale of fraud is moving downwards from high ticket items to lower value items. Fighting frauds like these is becoming harder and harder for organizations. 

What Can You Do To Stop Fraud?

Frauds are becoming more sophisticated and to fight those frauds, banks, financial organizations, and FinTechs need to understand the common trends. 

1. The first thing you’ll need to do is to understand the changes in market and user behavior. Fraud is based on smart people and smart systems trying to find out patterns so they can prevent fraudsters from stealing. As these patterns change, the advantages go to the fraudsters as they keep trying new tactics to trick banks, financial organizations, etc. In this pandemic, the style of financial fraud has changed, and lower-value household items are taking priority in the fraud cycle. To monitor these changes, compliance teams can better understand what the new baselines are and employ policies and technologies to fight fraud more efficiently. 
2. The next step includes institutions to operationalize the AML compliance. With the increased volume of financial fraud and ever-changing patterns, it is crucial to have strong AML compliance in place. Setting up rules and regulation is important for digital banking systems and for businesses that deal in online transactions. You can build your rules but all the necessary AML compliances have to be followed. 
3. Another way to fight online fraud is by determining identities. Let’s say a customer who applied for digital banking services had their faces on two different driver’s licenses, or the person has multiple email addresses and all of them are similar. All of these issues point to identity theft and the person being a fraudster. If they gain access to a company’s digital banking section, they can cause the company a lot of harm. Using online identity verification methods and online document verification methods like DIRO’s online document verification technology can help organizations identify the red flags in the early stages. 
4. Having a proper chain of communication and transparency between business and customers is highly important. Understanding the market and keeping up with details can be improved by communicating. Clear communication helps the team with a better understanding of the problem. For instance, during the pandemic quarterly and monthly reports are due for some businesses. Which can lead to multiple types of frauds and crimes. 

Conclusion: How to Tackle Fraud During the Pandemic?

The times are ever-changing, the only constant thing is the use of technologies for doing fraud and fraud prevention. Technologies such as DIRO’s online document verification technologies can assist banks, financial institutions, and third-party payment aggregators to verify documents in real-time. 

Using the technology, customer onboarding can be improved, digital banking can be made more secure and so much more. DIRO’s online document verification technology can help in building trust between businesses and organizations.