Payment fraud attack rate across fintech ballooned 70% in 2021

Sift released a report, detailing the increasingly sophisticated — and often automated — tactics cybercriminals leverage to commit payment fraud.

Derived from a global network of over 34,000 sites and apps and a survey of over 1,000 consumers, the index reveals that the payment fraud attack rate across fintech ballooned 70% in 2021—making it the highest increase across any vertical in the network.

The increase in payment fraud also correlated with massive 121% growth in fintech transaction volumes on Sift’s network year-over-year, making this sector an attractive target for cybercriminals.

According to this analysis, these rising attacks were aimed primarily at alternative payments like digital wallets, which saw a 200% increase in payment fraud, along with payments service providers (+169%), and cryptocurrency exchanges (+140%).

These abuse tactics were aimed at buy now/pay later (BNPL) services, which saw a 54% year-over-year uptick in fraud attack rates. In late 2021, Sift’s Trust and Safety Architects discovered a growing number of fraud schemes on Telegram offering unlimited access to BNPL accounts through fake credit card numbers and compromised email addresses—showcasing the array of methods actors in the Fraud Economy are using to target the entire fintech sector.

The hidden brand impact of payment fraud

Along with network-wide growth in average daily transaction volumes across every industry, Sift saw an overall 23% surge in blocked payment fraud attacks in 2021.

Concurrently, 49% of survey respondents report that they’ve fallen victim to payment abuse over the past one to three years—and 41% of the victims experienced it in the last year alone. Of those victims, 33% identified financial service sites as the ones that pose the highest risk, which could negatively affect customer trust in the industry.

“Many brands fail to realize that the damage of payment fraud goes beyond the initial financial impact,” said Jane Lee, Trust and Safety Architect at Sift. “The vast majority of consumers report abandoning brands after they experience fraud on a business’s website or app, diminishing customer lifetime value and driving up acquisition costs.

“Further, potential customers who see unauthorized charges from a particular company on their bank statements will forever associate that brand with fraud. In order to combat these attacks and grow revenue, businesses should look to adopt a Digital Trust & Safety strategy—one that focuses on preventing fraud while streamlining the experience for their customers.”

Source: https://www.helpnetsecurity.com/2022/03/21/payment-fraud-increase/