Fraudsters are always devising sneaky new strategies to launch attacks on companies and consumers. But in 2024, fraudsters won’t be the only ones with aces up their sleeves. Businesses are implementing new technologies to detect and prevent fraud attacks before they start.
Here’s a look at the top four fraud trends to watch for in 2024.
Fraudsters will bet big on AI and bad bots to enhance their scams
Artificial intelligence (AI) is a double-edged sword — it slices one way for a positive effect and the opposite way for a negative one. Because AI technologies are as available to legitimate businesses are they are to illegitimate, expect AI-driven fraud to increase in 2024.
Machine learning (ML), generative AI, and predictive analytics tools are making fraudsters faster and smarter at what they do. For instance, with the right combination of AI tools, even the lowest level of fraudster can create entire scamming campaigns (complete with websites, social ads, emails, and images) without any marketing, design, or coding knowledge. In addition to running large-scale phishing campaigns, fraudsters will also use AI to enhance impersonation scams and create synthetic identities.
Synthetic identity fraud is a form of financial fraud where scammers combine real consumer information (date of birth, social security number, etc.) with fake information to create new identities. Because synthetic identities don’t belong to real individuals, it’s harder to detect and prevent — which is contributing to its popularity. Backed by AI, synthetic identities are expected to push account takeover (ATO) fraud to new levels. In 2023 ATO fraud resulted in $635 Billion in merchant losses around the globe.
In 2024, bad bots will continue multiplying like gremlins, becoming more malicious and harder to detect. With generative AI in full swing, expect bad bots to become quicker and more efficient at what they’re programmed to do. A recent report found that AI can already crack 51% of common passwords in under a minute, and 71% in one day. One can guess what’s next once bad bots are thrown into the equation.
Traditional fraud defense solutions will fold
In 2024, fraud detection is out, and fraud prevention is in.
Traditional fraud platforms can’t keep up with tech-savvy fraudsters and the evolving digital landscape for a couple reasons:
First, the internet is enabling like-minded scammers around the globe to carry out more sophisticated, targeted attacks. Botnets (robot networks) are being used to scale millions of computers to launch cyberattacks that exploit security gaps on websites. And bad bots are being programmed to trick user and device IDs by mimicking human behaviors. The defense strategies that once worked for traditional fraud platforms, like rules-based systems and manual review, are no match for the AI, ML, and automation technology fraudsters are using to get ahead.
Second, traditional fraud defense platforms are unable to evolve and adapt in real time. Once a new type of fraud is recognized, it takes six to 12 months for legacy solutions to build new models to combat it. By the time the model is complete and implemented into a company’s fraud prevention strategy, the “solution” is already out of date and new fraud types are in play.
Cybercrime is predicted to cost the world a whopping $9.5 Trillion in 2024. This number, combined with the evolving tactics of scammers, will push companies to embrace a more comprehensive and proactive fraud prevention strategy to protect bottom lines and consumer experiences.
Winning the battle against evolving fraud requires a multi-layered solution that can adapt in real time using AI and ML.
As for the fates of companies that continue to use legacy fraud defense solutions, the outlook is grim. Failure to use a proactive fraud prevention strategy will result in lost revenue, fewer customers, and tainted reputations.
Companies will double down on behavioral biometrics
Capturing and understanding behavior is the path to real-time fraud prevention. In 2024, behavioral biometrics will be all the rage.
Behavioral biometrics is a method of fraud prevention that uses patterns of behavior to authenticate a user’s online identity. Simply put, it tracks a person’s keystrokes, mouse movements, typing rhythm, etc. to create a digital baseline of how they act. By capturing a person’s typical behaviors, it’s easy to spot atypical behaviors, like those of bots and fraudsters.
True human behaviors can’t be replicated, hacked, or stolen, so behavioral biometrics is a reliable method of fraud prevention. And, because it’s based on behavioral profiles (as opposed to attributes or transactions), it works in real time to catch new types of fraud before they get underway.
Most fraud solutions play defense and spring into action AFTER the fact, meaning the account’s been hacked, the money’s gone, and the scammer’s on their way to the Bahamas. Behavioral biometrics works in real time (milliseconds) playing offense on the front end BEFORE scams get underway. Catching the fraudster before the fraud is the true path to fraud prevention.
The chips favor pre-login profiling
In 2024 pre-login profiling goes from nice-to-have to must-have. It’s the year of capturing better consumer data, so tracking behavior before the login is a must. Online consumers are notorious for waiting until the last moment to login to sites, and it’s usually when they’re ready to make a purchase or check an account balance. For most companies, user behavior prior to login is a mystery. Anonymous visitors have a lot to say digitally, so if companies are only able to capture their data starting at login, they’re missing half the story.
Capturing data before the login also adds an extra layer of defense to a multi-layered fraud prevention solution. The more consumer data that’s collected — even on the front end — the more robust the fraud prevention will be.
The tables will turn
The days of fraudsters having the upper hand are ending. Many of the same technologies being used to carry out attacks, like ML and AI, are now being leveraged by companies to combat them. In 2024, real-time fraud prevention will be the talk of the town and the ace of spades companies pull to win the game.