The world has indeed embraced the digital era. And why wouldn’t we with so many benefits of advanced technology. But one particular advantage that stands out to every generation is speed. With just a few clicks, we can complete online transactions, plus the virtual space has become like a global common room where anyone and any service can be reached within moments. It’s fast, easy to use and accessible worldwide.
However, with the increased convenience comes significant risk. As we’ve adapted to become reliant on the internet and technology as a whole, so have fraudsters.
Being aware of these risks and having tools and strategies in place to combat them is the best way to protect your business. So, let’s take a look at a range of statistics on how fraud affected businesses last year.
As we can see, cybercrime commonly presents itself as financial fraud using the online world to steal funds and then disappear without a trace. It’s become an art form that hackers have perfected, and businesses, without the proper defences in place, can have a hard time keeping up. So it’s not surprising that a substantial 39% of UK businesses reported falling victim to a cyber-attack in 2022.
Online ecommerce has become more and more exposed as the types of commerce expand, including mobile payments and social shopfronts. Its vulnerability is costly both to merchants and customers who are often easy prey when conducting online transactions if there’s a lack of secure third-party platforms or gateways. Businesses and their clients are more vulnerable to credit and debit card fraud, data breaches and identity theft.
According to a report by Cybersecurity Ventures, the global cost of cybercrime is projected to skyrocket to an astonishing $10.5 trillion annually by 2025. This staggering figure includes a wide range of cyber-attacks, specifically those targeting online payments.
Credit card fraud statistics
Credit card fraud has become an increasingly severe problem when it comes to online payments. So much so that the global loss due to credit card fraud is estimated to reach $49.32 billion in 2030. That’s huge! But there are technologies and policies in place to help combat this. For example, EMV (Europay, MasterCard and Visa) aims to limit fraud by using embedded chips on smart cards. The EMV chips store a digital code that changes with every purchase making it very difficult for fraudsters to copy.
Chargebacks, which were initially designed to just protect the customer, have had a significant impact on card fraud, often called ‘friendly fraud’. In fact, at one point around 86% of all chargebacks were fraudulent. Customers could easily take advantage of the process and would receive an item, dispute it, demand a full refund, yet keep the item. The practice of friendly fraud has been recognised as one of the top threats to ecommerce and hospitality, and is especially damaging to small businesses – this type of fraud has been predicted to hit $100 billion this year.
However, the rules around chargebacks are getting stricter to protect the merchant also, with the aim to only let genuine claims through. There are also tools in place to help merchants manage chargebacks, like alerts that sends them an early warning so that they can turn it into a normal refund if it can’t be disputed and reduce the amount of charges.
Identity theft statistics
If you have an online presence, which hundreds of millions of people around the world have, then you’ll have personal and potentially sensitive information available for fraudsters to hack. A scary thought. They can do anything from reporting false names and information to authorities to impersonating and invading bank accounts.
Identity theft, especially in the digital age, can strike anyone. Due to the ease of access to the internet and other sources that can be manipulated or corrupted by cybercriminals, it has become one of the biggest vulnerabilities of the average consumer. 2022 saw a 21% increase in identity fraud, and 90% of it originated online. So it’s more important now than ever to be vigilant when online.
Prevention is key because the cost of this type of fraud can ramp up. That’s why, as a business, using a secure payment gateway and additional verification tools has become paramount to avoid identity theft.
Data breaches & cybercrime
Worldwide data breaches have remained a growing problem, with an average cost to businesses reaching a huge $4.35 million in 2022. Attempts at stealing intellectual property or classified information is an issue that every single company in the world faces, and not even major brands have a full grasp on their security. In recent years, some of the big players have seen shattering numbers of data breaches in their systems and millions of records accessed. For example, in March 2021 Facebook lost information on 533 million users and in January 2020 Microsoft lost 250 million customer support records. You can find more of the world’s biggest data breaches here.
Understanding how fraudsters attack
The online world is highly accessible and rich in opportunities. Seriously, what would we do without the internet these days? But it’s also equally filled with risks. More and more people are now opting for the quicker options of paying their bills, online shopping and making reservations that require their credit card or personal information.
As the statistics have shown, it has opened the door for fraudulent activity where they abuse the opportunities the internet has provided.
It’s also not surprising that they take advantage of holiday seasons too, where consumers are more likely to be spending. Since 2018, identity fraud rates only rose by up to 15% year-on-year during November and December, so Christmas time can be a particularly dangerous period for online shoppers.
There are numerous types of fraud and scams that cybercriminals actively pursue, even though their attack tools and methods may vary. One of the most popular scams on the internet is phishing scams. Cybercriminals commonly send a message, usually by email, pretending to be an authority, such as a representative of your bank, workplace or service you might be using to gain sensitive information or access to your device. During the height of the pandemic, phishing incidents rose by 220%.
But that’s not all. There’s also fake ‘too good to be true’ loans, money laundering, romance scams, the list goes on.
How to prevent cybercrime
With the functionality of the online world continually expanding with people being able to do more and more online, it has become vital to find secure services and payment methods to successfully protect consumers.
On top of the EMV, there have been other solutions introduced to tackle the risks of online payments and protect the consumers payment information. The Payment Card Industry Data Security Standards (PCI DSS) set regulations for businesses and card schemes to follow to increase online payment security, including the introduction of 3D Secure.
Many online banking and payment providers, like Total Processing, have additional security features based on these requirements.
- Verification systems such as two-factor authentication where the consumer will need to provide two forms of identification before making a transaction. For example, their PIN, facial recognition or a passcode.
- A secure payment gateway with an array of features to help prevent customers from stepping into the pitfalls of online transactions.
- Being able to offer secure payment methods during the checkout.
- Staying up to date on the latest technology to ensure safe transactions.
You can find out more ways to protect your business here.
Protect your business
It’s pretty clear from these statistics that there’s an urgency for businesses and individuals alike to prioritise cybersecurity measures to protect themselves from the financial and personal risks associated with cybercrime. But it’s not easy. Fraudsters will continue developing and improving their practices, and it may be too fast for the average consumer or business to keep up with. It can be even more difficult if you’re a high risk merchant.
Implementing robust security protocols, staying informed about the latest threats and using secure payment platforms can go a long way in safeguarding your business and preserving the integrity of online transactions. By working together to combat cybercrime, we can make significant strides in reducing the impact of these threats on businesses and customers worldwide.
As a secure payment processing provider, we will help you continue to provide a safe payment offering to keep your customers and your business protected.
Get in touch today to see how our services can keep fraudsters at bay.
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