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Stuart O'Brien

Join these first class organisations at the Fraud Prevention Summit
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Can you make the date to join us at the Fraud Prevention Summit? This unique event will allow you to network with peers, meet with leading suppliers & enjoy a series of seminar sessions.

Wednesday, 6th November 2024 | Hilton London Canary Wharf

As a fraud professional, you can attend for FREE – Secure your place here. 

Add your name to the guest list HERE, where you’ll be joining peers representing the likes of:

  • AS EU Ltd
  • Aspers Casino
  • Baxi Heating UK Ltd
  • Citi
  • Domestic & General
  • HSBC
  • John Lewis Partnership Plc
  • KFC
  • London Borough of Lambeth
  • PWC
  • Senior Plc
  • Sky
  • Tesco Mobile
  • Vanguard
  • Vanquis Bank
  • Virgin Atlantic Airways
  • Vitality
  • Which?

….And many more!

BOOK YOUR FREE PLACE!

As well as multiple opportunities to network with other industry professionals, your pass will also include:

Your own itinerary of 1-2-1 meetings with suppliers, access to our educational seminar programme presented by top industry speakers, lunch and refreshments throughout, personalised attendance options to suit your schedule, and more! – See what you can expect at the event >>>
 

To find out more, please get in touch with me and I will be happy to provide more information.

Aviva reveals huge spike in car insurance fraud
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Aviva reported a 39% increase in the number of claims declined as a result of fraud in 2023, uncovering more than 11,000 suspect claims worth £116m – the equivalent of 30 bogus claims a day with a value of £318,000.

The company says it’s investigating a further 13,100 claims for suspected fraud. Fraudulent motor insurance claims for injury and vehicle damage represented the majority of detected fraud, accounting for two out of three (66%) suspect claims.

Motor injury fraud remains the most popular target for fraudsters, accounting for 35% of all bogus claims Aviva detected. The number of fraudulent injury claims declined for suspected fraud grew by 19% and was worth more than £23m – £6m of which came from declined crash for cash claims.

A large proportion of the injury claims Aviva declined for fraud are opportunistic claims brought by third parties (not Aviva customers) – for example, an exaggerated injury claim stemming from a low-speed accident, such as a shunt in a car park. Aviva defended more than 400 such fraudulent or exaggerated bodily injury claims at trial to limit the impact that these claims can have on customers’ motor premiums.

Fraudulent claims for motor damage rocketed by 123%, as third parties sought to exaggerate and inflate the cost of repair and credit hire claims. As highlighted by Aviva in 2022, organised whiplash fraudsters have refocused their efforts on the repair aspects of a motor claim, including credit hire and repair. Aviva has witnessed particular growth in motor damage fraud after the Whiplash Reforms came into effect in 2021, signaling a shift in focus for organised fraudsters.

Though not technically fraud, the use of ‘spoof ads’ on internet search engines by a small number of unscrupulous claims and accident management companies (CMC / AMC) continues to mislead customers into thinking they are contacting their motor insurer to claim for an accident they’ve had.

The trouble arises when the at-fault insurer challenges the inflated costs presented by the CMC or AMC. The claims company will then pressure the customer into paying, as they will have signed contracts obliging them to pay if the repair, credit hire and other costs can’t be recovered. These costs are frequently in the tens of thousands of pounds. Although this would normally be covered as part of the customer’s insurance policy, because the customer inadvertently (and often unknowingly) claimed via a CMC or AMC, the insurer is both unaware of the claim and unable to help the customer.

To protect customers from the effects of fraud, Aviva continues to invest in its detection capabilities. This has seen Aviva double the number of employees dedicated to investigating fraud, as well as delivering more than 6,000 hours of counter-fraud training for its people.

Aviva identified fraud on more than 51,000 motor policy applications, up 64% on 2022 policy fraud detection figures. The sharp increase reflects the continual training and investment that Aviva has made in its policy fraud detection capabilities. By keeping known fraudsters off its books, Aviva is able to protect customers from the worst effects of policy fraud, ensuring its genuine customers don’t pay for the actions of fraudsters.

These figures also include policies sold by unregulated third parties, known as ‘ghost brokers’. Ghost brokers act as an insurance intermediary and purchase insurance policies using false or misleading information about the customer to acquire cheaper insurance. Ghost brokers will then frequently alter the insurance ‘policy’ before sharing with their ‘customer’ to show ‘proof’ of their insurance purchase. However, the insurance policy is all but worthless, as the ghost broker obtains the policy through lying and misrepresenting the identity and/or nature of the risk being insured (such as address, age of driver, etc.). 

The result is that the ‘policyholder’ directly compensates the fraudster for a worthless policy, meaning they are driving without valid insurance which is not only illegal, but also carries all of the associated risks of driving uninsured.

The next largest area for fraudulent claims is in liability, such as bogus slips and trips. Fraudulent claims for liability represent 23% of all fraudulent claims detected by Aviva. Despite the number of fraudulent liability claims remaining flat, the value of these claims has grown by 9% year-on-year, highlighting the importance of detection in this area.

Household fraud accounted for 6% of detected fraud and was primarily comprised of claims for valuable items. The most popular items that were fraudulently claimed for were:

  1. Jewellery/rings
  2. Mobile phones
  3. TV’s
  4. Laptops
  5. Tablets

Pete Ward, Head of Claims Counter Fraud at Aviva, said, “We’re here to help our customers when something’s gone wrong, settling their claim quickly and fairly. But where we detect fraud, we will vigorously defend fraudulent or inflated claims and, where appropriate, prosecute those who target Aviva.

“That’s why we’ve invested in the tools, technology and people necessary to create a robust counter-fraud capability, helping to ensure the cost of insurance fraud is not passed onto our customers. This investment has improved our ability to detect fraud across all lines of business and has contributed to the steep rise in the number of fraudulent claims we detected last year – particularly in motor, where exaggerated claims for damage have rocketed.

“Last year also saw Aviva, working with IFED, secure the industry’s first Serious Crime Prevention Order against Hamed Sediqi, who repeatedly targeted Aviva in an organised motor fraud campaign. This is a landmark result against a serial fraudster which will not only protect Aviva and its customers from being targeted, but should also act as a wake-up call to other professional fraudsters about the consequences of their actions. Combined with our recent successful application of the Proceeds of Crime Act, Aviva continues not only to detect fraud, but also create powerful deterrents against committing insurance fraud in the first place.”

Photo by Yeka.UK on Unsplash

FRAUD DETECTION MONTH: How the latest tools are helping to shield the bottom line
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Fraudulent activity is a persistent threat for both retail and banking sectors in the UK. Anti-fraud professionals are constantly on the lookout for innovative solutions to combat ever-evolving scams and safeguard customer funds. The landscape of fraud detection is experiencing a significant shift, with technology playing an increasingly crucial role in mitigating financial losses and protecting consumers...

The Arsenal of Modern Fraud Detection:

  • Machine Learning and AI-Powered Solutions: Advanced machine learning algorithms are revolutionising fraud detection. These algorithms can analyse massive datasets of historical transactions, identify suspicious patterns, and predict fraudulent activity in real-time. This allows for proactive intervention before losses occur.
  • Behavioural Analytics and Biometrics: Solutions that analyse customer behaviour patterns can flag suspicious activity, even if the purchase amount is small. Biometric authentication like fingerprint or facial recognition technology can further strengthen fraud prevention measures.
  • Fraud Case Management and Network Analysis: Fraud case management platforms streamline the investigation process, allowing anti-fraud professionals to track trends, identify networks of fraudsters, and share intelligence with other institutions.
  • Collaboration and Data Sharing: Fraudulent activity often transcends individual institutions. Data sharing agreements between banks, retailers, and law enforcement agencies can create a more comprehensive picture of fraudulent activity and facilitate a coordinated approach to combating it.

The Evolving Landscape of Fraud Detection:

The fight against fraud is an ongoing battle that requires constant adaptation. Here’s a glimpse into how anti-fraud approaches are likely to evolve:

  • Focus on Artificial Intelligence (AI): AI capabilities within fraud detection solutions will continue to advance.Natural Language Processing (NLP) will enable systems to understand complex narratives behind fraudulent schemes, while self-learning algorithms will adapt to new fraud tactics in real-time.
  • The Rise of Open Banking: Open Banking initiatives in the UK are fostering collaboration between financial institutions and third-party providers. This collaboration will lead to more sophisticated fraud detection tools that can leverage a wider range of data sources.
  • Customer Education and Empowerment: Consumer awareness of fraud tactics remains crucial. Enhanced customer education campaigns and user-friendly tools for fraud reporting will empower consumers to play a more active role in protecting themselves.
  • Focus on Regulatory Compliance: As technology evolves, so too will regulatory requirements. Anti-fraud professionals will need to stay abreast of changing regulations and ensure their chosen solutions comply with evolving data privacy and security standards.

Fraud detection in the UK’s retail and banking sectors is no longer a reactive process. By leveraging technological advancements like machine learning, AI, and data analytics, anti-fraud professionals are proactively mitigating financial losses and safeguarding consumers. As technology continues to evolve and fraudsters develop increasingly sophisticated tactics, collaboration, data sharing, and an ongoing focus on innovation will be key to staying ahead of the curve and protecting the financial well-being of British consumers.

Are you looking for Fraud Detection solutions for your organisation? The Fraud Prevention Summit can help!

Photo by rc.xyz NFT gallery on Unsplash

Research: European businesses ‘unprepared for increasing cyber attacks’
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A Cloudflare study has revealed that 64% of business leaders, including the retail and financial services sectors, expect a cybersecurity incident in the next 12 months, but only 29% feel highly prepared to defend against them

The report, called “Shielding the Future: Europe’s Cyber Threat Landscape Report” shares the latest data on how organisations are coping with rising volumes of cybersecurity incidents, their levels of preparedness, and top challenges.

These new findings reveal an ongoing concern around growing cybersecurity threats and a feeling of unpreparedness among European businesses.

The survey, which was conducted with more than 4,000 business and technology leaders across 13 European markets (Benelux, CEER, DACH, Nordics, Southern Europe, UK), found that 40% of organisations experienced a cybersecurity incident in the last 12 months. 

Of those that suffered such an event, 84% report that the frequency of these events has increased over the same period, with almost one in five (16%) suffering a cybersecurity attack every 6-11 days. Meanwhile, 62% say that attacker dwell time has also increased in the same time period. 

Looking ahead, two-thirds (66%) of respondents believe that they will see even more attacks within the next year and a significant 64% say that they expect to suffer a cybersecurity incident within the next 12 months. 

Concerningly, despite the increasing volume and frequency of these attacks, only 29% of respondents say they are highly prepared for cybersecurity incidents in the future.

Additionally, industries that had experienced fewer attacks were also among those least prepared. Just 28% of those working in healthcare and 31% of those working in education claimed to have suffered an attack in the last 12 months. For those same industries, the perceived level of preparedness for an incident in the future was low – just 18% and 19%, respectively.

The reverse is true for those in the IT & technology industry. With almost half (49%) being attacked in the last year, however, organisations in this field are seemingly on their guard. Over a third (35%) of respondents from this sector say they are highly prepared for an attack, making it the industry most confident in its ability to deal with an incident, followed by companies in financial services and retail (32% and 31% respectively).  

When looking at organisational size, the lack of preparation by smaller businesses is a particular concern, with only a quarter (25%) claiming to be highly prepared. Medium-sized and large businesses do not fare much better though, with only 27% and 32%, respectively, claiming high levels of preparedness.

For those businesses impacted by a cybersecurity breach, more than a third of respondents (39%) say that the most significant effect remains financial. More than one in five (22%) claim to have lost revenue following an incident. In addition, 23% have suffered increased insurance premiums, 22% have paid fines, and another 23% have experienced legal action. A further one in five (19%) have been forced to lay off members of the team due to the financial losses experienced in the aftermath of an incident. 

Looking at the numbers more closely, almost two-fifths (38%) of respondents say that the financial impact of the incidents they suffered cost between £788,000 and £1.576 million, while a quarter (25%) estimated the loss to be £1.576 million or more. 

A further 17% said that reputational damage was the most significant effect. Additionally, 31% put growth plans on hold in the aftermath of an incident, while over a quarter (28%) have temporarily suspended business operations. 

It’s unsurprising that financial gain was at the heart of many attacks (48%) across the European countries surveyed. However, survey respondents also believe that the threats they have experienced have a much wider range of objectives.

The majority (53%) of those impacted by an incident in the last 12 months say that the main purpose was to plant spyware. And  almost half (48%) of those surveyed say that ransomware plants were the main purpose for the attack. 

When it comes to the most commonly experienced attack vectors, these too are diverse. Phishing tops the list, with almost three in five (59%) respondents claiming to have seen this approach. That’s closely followed by web attacks (58%) and DDoS attacks (37%). Also prevalent were stolen credentials and business email compromise, with almost a third (32%) having experienced these.  

When it comes to tackling these issues, onboarding more products seems to be the go-to response. In fact, nearly half (49%) have more than 11 different products and solutions. The vast majority (72%) believe that this complexity is having a negative impact on their effectiveness, and yet two-thirds (67%) expect the number of tools they adopt to increase in the next 12 months. 

Notably, the three most pressing challenges cybersecurity decision makers and leaders face are: consolidating and simplifying cybersecurity estate (48%); modernising applications used by organisation (47%); and modernising networks operated by organisation (42%). 

Further education on Zero Trust is required for maximum impact

Respondents report three clear problems in the existing architectures they work with: applications and data stored in the public cloud; limited oversight over IT supply chains; and over-reliance on VPNs to protect applications (with each factor mentioned by 34% of respondents).

Given these problems, it is unsurprising that securing a hybrid workforce is a top priority, coming in the top three for more than a third (36%) of our respondents. 

Worryingly, for many organisations, deployment of countermeasures is a long way behind, and in some cases not yet started. Despite widespread recognition of its ability to protect hybrid or remote workers, when looking at deployment of Zero Trust network access., just 25% of respondents say this solution is fully deployed and over half (58%) say that Zero Trust adoption is still in its early stages.  

While two-fifths (44%) say they are optimistic about the ability of Zero Trust to consolidate technology upgrades, our respondents also indicated a lack of faith in their leadership teams’ knowledge of the tool. In fact, the majority (86%) believe their leadership does not fully understand it, while nearly one in five (16%) say their leadership has either partial or no real understanding. According to 42% of those surveyed, this lack of understanding is the single biggest barrier to adoption.

Despite increased budgets, funding, talent, and training remain challenges

With business leaders anticipating more cybersecurity incidents, it’s positive to see that 54% of respondents expect their IT budget for cybersecurity to increase in the next year.

A quarter (25%) of business and IT leaders expect cybersecurity to make up at least 20% of their organisations’ IT spend in the year ahead. And of those expecting a budgetary increase, two thirds (66%) anticipate a rise of more than 10%. 

For the majority, protecting their networks remains the number one investment area, with nearly 24% of the budget allocated to this pillar on average. Despite being the area where respondents see a significant lack of preparedness, devices are set to receive the second lowest allocation of budget share. 

In terms of how this budget allocation is decided, the top two determinants were the number of incidents experienced (34%) and the cost of dealing with them (20%), revealing that most organisations appear to remain reactive in their funding allocation decisions. 

Funding remains the top concern for 46% of our respondents. However, other concerns, such as a lack of talent (41%) as well as the evolving business requirements and user needs (30%) also keep business and tech leaders awake at night.  

Interestingly, despite the increasing volume of attacks, a quarter (25%) cite a lack of buy-in from leadership as a key challenge. With less than a quarter (23%) having not undertaken leadership or general employee training, it is therefore unsurprising that 21% of business and IT leaders rate their organisations’ cybersecurity culture as weak or neutral.

“Organisations across Europe are managing an increasingly complex cybersecurity landscape, all while ensuring operational efficiency, regulatory compliance, and uninterrupted productivity. With incidents on the rise in both volume and frequency, this balancing act becomes even more challenging, leaving leaders with a sense of diminishing control over their organisations’ technological and security frameworks,” said Andy Lockhart, Head of EMEA at Cloudflare. “This significant challenge requires innovative solutions capable of integrating diverse technological components into a cohesive and agile framework. The age of siloed legacy infrastructures is giving way to a new model of “any-to-any” cloud platforms, creating catalysts for innovation and growth. By concentrating on strategic integration any-to-any cloud platforms empower leaders to transform technological challenges into competitive advantages. Adopting this approach will help shape a future where connectivity and innovation are at the heart of business success, opening the door to unlimited possibilities,” adds Lockhart.

Photo by Kasia Derenda on Unsplash

DIGITAL IDENTITY MONTH: Choosing the best solutions for your business
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The UK’s ecommerce and financial services sectors are constantly battling fraudsters who exploit vulnerabilities in online transactions. Digital identity verification solutions have become frontline tools in this fight, but with an abundance of providers, choosing the right partner can be daunting. Here are our top tips for anti-fraud professionals to source trusted digital identity verification solutions…

1. Go Beyond KYC/AML Compliance – Embrace Risk-Based Assessments:

While KYC (Know Your Customer) and AML (Anti-Money Laundering) compliance are essential, a one-size-fits-all approach won’t cut it. Look for providers offering risk-based assessments that tailor verification processes based on transaction risk levels. This streamlines the customer experience for low-risk transactions while strengthening verification for high-risk scenarios.

2. Prioritize Multi-Factor Authentication (MFA) and Biometrics:

Static password verification is easily compromised. Seek providers offering robust MFA solutions that combine factors like passwords, one-time codes, and biometrics (e.g., fingerprint scanning, facial recognition) for stronger authentication across all customer touchpoints.

3. Embrace Ongoing Monitoring and AI-Powered Solutions:

Fraudsters constantly evolve their tactics. Choose providers utilizing AI (Artificial Intelligence) and machine learning to continuously analyze customer behaviour and detect anomalies indicative of fraudulent activity. Real-time monitoring can prevent fraudulent transactions before they occur.

4. Seek Solutions with Global Reach and Regulatory Expertise:

For businesses operating internationally, a provider with a global reach and an in-depth understanding of international regulations is crucial. This ensures compliance with regional regulations like PSD2 (Payment Services Directive 2) in Europe, while still safeguarding transactions processed from diverse locations.

5. Prioritize Data Security and Transparency:

Data breaches can erode customer trust and lead to hefty fines. Partner with providers demonstrating a commitment to robust data security practices, including encryption, access controls, and regular penetration testing. Transparency about data usage and storage locations is also essential.

Bonus Tip: Collaboration is Key:

Consider partnering with a provider that fosters open communication and collaboration. Regularly share fraud trends and concerns with your chosen provider – joint efforts lead to more effective anti-fraud strategies.

By adopting these recommendations, anti-fraud professionals in the UK’s ecommerce and financial services sectors can confidently source trusted digital identity verification solutions. This strengthens the fight against fraud, boosts customer trust, and ultimately paves the way for a more secure and thriving digital economy.

Are you looking for Digital Identity Verification solutions for your organisation? The Fraud Prevention Summit can help!

Photo by Carson Arias on Unsplash

Card payments in China to hit $20 trillion
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The Chinese card payments market is expected to grow by 3.7% to reach CNY141.1 trillion ($19.9 trillion) in 2024, supported by a constant consumer shift towards non-cash payments.

GlobalData’s Payment Cards Analytics reveals that card payments value in China reached CNY136.0 trillion ($19.2 trillion) in 2023, registering a healthy compound annual growth rate (CAGR) of 3.8% during 2019-23.

Shivani Gupta, Senior Banking and Payments Analyst at GlobalData, said: “China is the world’s largest payment card market in terms of transaction value, well ahead of developed countries such as the US. Chinese consumers are increasingly adopting payment cards, spurred by a strong banked population, government initiatives to push digital payments, rising consumer preference for electronic payments, and the expansion of payment acceptance infrastructure in the country.”

The growth of card payments has also been supported by government initiatives to push cashless payments. In April 2024, the People’s Bank of China, the country’s central bank, along with the Ministry of Culture and Tourism, the State Administration of Foreign Exchange and the State Administration of Cultural Heritage departments, issued notice to encourage electronic payment acceptance in the country. As part of this, government agencies are required to provide adequate acceptance payment infrastructure, enabling consumers to pay for cultural and tourism transactions digitally using debit/credit cards and digital wallets.

Gupta adds: “The central bank’s decision to open up card payment space, which was primarily dominated by China UnionPay, to international players like American Express and Mastercard will enable them to process domestic card payments thereby bringing in more competition.”

Among the card types, debit cards are preferred over credit and charge cards, accounting for 59.9% share of the overall card payment value in 2023. Debit cards are increasingly being used for payments, especially low-to-medium value transactions. This has been driven by rising consumer awareness, banks offering contactless debit cards, and the expansion of the country’s POS network.

While credit and charge cards have lower adoption and use compared to debit cards, these cards are increasingly being used for payments. The frequency of credit and charge card payments rose from 70.9 transactions per card in 2019 to 129.3 transactions in 2023. Consumers primarily use these cards to take advantage of value-added services such as reward points, installment payment facilities, and discounts offered by banks.

Gupta concludes: “The Chinese payment card market is expected to continue its upward growth trajectory, supported by government initiatives, rising consumer preference for digital payments, and improving card acceptance infrastructure. Subsequently, the card payments value is anticipated to grow at a CAGR of 5.8% between 2024 and 2028 to reach CNY176.9 trillion ($25.0 trillion) in 2028.”

VIDEO: Everything you need to know about the Fraud Prevention Summit
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The next Fraud Prevention Summit takes place on November 6th at the Hilton London Canary Wharf – here’s what you can expect to experience as one of our delegates…

Meet with innovative solution providers who match your requirements and attend a series of insightful seminar sessions throughout the one-day event.

We have an invitation specifically for you, your pass is completely free, which includes: 

  • A seat at our educational seminar programme
  • A personalised itinerary of 1-2-1 meetings with industry leading suppliers, to discuss your business projects
  • Lunch and refreshments provided throughout the event
  • Informal networking opportunities with fellow industry professionals
  • Personalised attendance options to suit your schedule

We have had a high number of registrations in the past couple of weeks and don’t want you to miss out on a spot – secure your free pass.

Please feel free to contact us here with any questions!

If you specialise in Fraud Detection Tools we want to hear from you!
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Each month on Fraud Prevention Briefing we’re shining the spotlight on a different part of the market – and in July we’ll be focussing on Fraud Detection Tools.

It’s all part of our ‘Recommended’ editorial feature, designed to help industry buyers find the best products and services available today.

So, if you specialise in Fraud Detection Tools and would like to be included as part of this exciting new shop window, we’d love to hear from you – for more info, contact Jennie Lane on 01992 374 098 | j.lane@forumevents.co.uk.

Jul – Fraud Detection Tools
Aug – Anti Fraud Platforms
Sep – AI for Fraud
Oct – Chargebacks
Nov – Biometrics for Fraud prevention
Dec – Mobile Fraud Prevention
Jan – Digital Identity Verification
Feb – Fraud Prevention Solutions
Mar – Risk Prevention & Compliance
Apr – Financial Crime
May – Multi-factor Authentication
Jun – Digital Identity Verification

Photo by Mimi Thian on Unsplash

AI-powered malicious attacks are now a top emerging risk, says study
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Concern about artificial intelligence (AI)-enhanced malicious attacks ascended to the top of the Gartner emerging risk rankings in the first quarter of 2024.

“The prospect of malicious actions enabled by AI-assisted tools is concerning risk leaders worldwide,” said Gamika Takkar, director, research in the Gartner Risk & Audit Practice. “The relative ease of use and quality of AI-assisted tools, such as voice and image generation, increase the ability to carry out malicious attacks with wide-ranging consequences.”

During the first quarter of this year, Gartner surveyed 345 senior enterprise risk executives to capture and benchmark their top 20 emerging risks and provide leaders a view of their causes and potential consequences.

Risks related to AI captured the top two rankings in the 1Q24 survey (see Table 1) with AI-enhanced malicious attacks cited as the top emerging risk and AI-assisted misinformation also causing concern. Escalating political polarization, which entered the tracker for the first time in 4Q23, dropped from the second most cited concern to third place.

Table 1: Top Five Most Commonly Cited Emerging Risks in Q1 2024
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Source: Gartner (May 2024)

One of the key drivers of AI-enabled attacks and misinformation is the rapidly expanding access to its capabilities. AI enhancement can provide malicious code, and facilitate phishing and social engineering, which enables better intrusion, increased credibility and more damaging attacks.

“Its low cost and rapid growth also expose users to the technology who have little awareness on how to recognize when AI-enabled tools are providing valid vs. false or misrepresented information,” said Takkar.

The potential impacts of AI-enhanced attacks and misinformation are far-reaching and consequential to reputation, productivity and the ability of organizations to respond. Increased breaches and disclosure requirements can erode trust in an organization and brand among clients, consumers and partners.

“The speed and quality of AI-enhanced attacks and misinformation also hinder information security teams’ ability to respond and adapt to the new security landscape, further amplifying its vulnerabilities,” said Takkar.Gartner clients can read more in 1Q24 Emerging Risk Report. Nonclients can read: 1Q24 Emerging Risk Trends.

DIGITAL IDENTITY MONTH: The past, present and future of fraud prevention for online brands
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The digital landscape has undergone a significant transformation in recent years, with online commerce booming and the need for robust security measures becoming ever more critical. At the forefront of this evolution lies the realm of digital identity verification – the process of confirming a user’s online identity. Let’s delve into the fascinating journey of digital identity verification and explore how solutions for online brands tackling merchant fraud in the UK are likely to evolve in the coming years...

From Static Passwords to Multi-Factor Authentication:

Traditionally, usernames and passwords served as the primary gatekeepers of online identity. However, their vulnerability to brute force attacks and phishing scams has become increasingly evident. The introduction of multi-factor authentication (MFA) marked a significant step forward. MFA adds an extra layer of security by requiring users to provide additional verification factors, such as a one-time passcode sent to their phone, alongside their password.

Biometrics and the Rise of Frictionless Verification:

The rise of smartphones has paved the way for the integration of biometric verification methods like fingerprint scanning and facial recognition. These offer a more convenient and potentially more secure solution compared to traditional passwords or knowledge-based questions. Additionally, advancements in liveness detection ensure the user is actually present and not using a photo or video to bypass verification.

Open Banking and the Future of Secure Transactions:

Open Banking, a regulatory initiative in the UK, allows third-party providers with user consent to access a customer’s verified bank account information. This information can be used for secure and frictionless identity verification without the need for passwords or additional verification steps. Open Banking holds immense potential for online brands,streamlining the customer journey while reducing fraud risk.

The Evolving Landscape of Merchant Fraud Solutions:

As digital identity verification continues to evolve, so too will the solutions available to online brands battling merchant fraud in the UK. Here’s a glimpse into what the future might hold:

  • Machine Learning and AI-powered Fraud Detection: Advanced algorithms will analyze user behaviour,transaction patterns, and real-time data to identify and prevent fraudulent activity with greater accuracy.
  • Behavioural Biometrics: This emerging technology analyzes a user’s interaction patterns, such as typing speed and mouse movement, to build a unique digital footprint and detect anomalies indicative of fraudulent activity.
  • Continuous Identity Verification: Moving beyond a single verification point, continuous identity verification might involve periodic checks throughout a user’s online journey, ensuring ongoing legitimacy.

Collaboration and Knowledge Sharing:

The fight against online fraud requires a collaborative effort. Online brands are likely to witness increased partnerships with financial institutions, technology providers, and law enforcement agencies to share data and develop effective strategies for combating evolving fraud tactics.

The Road Ahead: A Secure and Seamless Future

By embracing innovative digital identity verification solutions, online brands in the UK can strike a crucial balance between security and user experience. As technology continues to evolve, a future beckons where online transactions are not only secure but also frictionless, fostering trust and confidence for both consumers and businesses alike.

Are you looking for Digital Identity Verification solutions for your organisation? The Fraud Prevention Summit can help!

Photo by Ari He on Unsplash