Fraud has long been a problem in different business sectors, and it continues to challenge enterprisesin the financial and e-commerce industries.Fraud happens when someone steals money, property, or personal information from the victim. Malicious individuals conduct fraud in the form of: fraudulent or unauthorized transactions; false requests for a refund, return, or bounced checks; lost or stolen merchandise; or hacked digital financial accounts such as cryptocurrency digital wallet.
Accordingly, with the evolving trends and practices in business industries, hackers are becoming more creative with their circumventing techniques. They also defraud others through phishing, identity theft, and credit card fraud, among other types of fraud.
Phishing is a social engineering technique where a fraudulent individual pretends to be a trusted entity, for instance, a bank, and calls or sends the “customer” an email or text message directing them to confirm, update, or validate details on their account. Acquired information, such as login credentials or credit card information, will then be used for their fraudulent activities.
Identity theft happens when criminals assume their victim’s identity to authenticate into digital platforms where they perform illegal activities. Meanwhile, credit card fraud occurs when fraudsters use their victim’s credit or debit card or card numbers to obtain money or property.
Fraud affects both customers and organizations. Customers often lose their money from fraud, and businesses face the consequences of distrust and reputational damage. Still, both the business and client have a part in boosting fraud prevention.
Enterprises operating in the modern business landscape must include electronic Know Your Customer or eKYC guidelines in their identity proofing procedures. This is similar to the traditional KYC protocol, but the only difference is that customers will only have to upload the needed documents and credentials for the digital identity verification process.
In addition to their eKYC practice, organizations can also invest in modern authentication solutions that adhere to FIDO 2.0 standards for strong authentication. FIDO2 offers real-time fraud prevention measures as it leverages a combination of mobile and biometric technology. Platform users are prompted to enter their biometrics (facial or fingerprint) into their device during the online registration. Their biometric and device will act as the private key that they can use to access their account securely.
Meanwhile, customers also need to employ the best fraud prevention practices, including replacing password-based authentication methods with passwordless login. By doing so, they eliminate password-related issues and risks. To know more about the categories of fraud, how it happens, and how to prevent customers and businesses from falling victim to it, read this infographic from LoginID.
