Financial Services News

Most Financial Services Firms Report Increases in Fraud Targeting Mobile – Digital Transactions

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With mobile-device use firmly ingrained in consumer behavior, it’s little wonder that fraudsters are following these consumers. That’s very apparent in the latest LexisNexis Risk Solutions report, which found 98% of financial-services firms it surveyed reported that fraud targeting mobile has increased.

These increases also meant the cost of the fraud has increased. In 2021, mobile accounted for 27% of respondents’ fraud costs, a 5-point increase from 22% in 2020. LexisNexis Risk Solutions defines financial services as retail and commercial banks, credit unions, and investment, trust, and wealth-management providers.

“Mobile has been one of the fastest-growing channels for most organizations to interact with their customers,” Christopher Schnieper, director of fraud and identity at the Atlanta-based company, says in an email to Digital Transactions News. “A combination of new-to-mobile users and additional transaction channels has created an environment where fraudsters are able to exploit new users or less -developed capabilities.”

And it may come as little surprise that bot attacks also increased in 2021. In 2020, U.S. financial-services firms said 14% of their transactions were generated by malicious automated bot attacks. In 2021, they jumped to 24%, according to the “True Cost of Fraud – Financial Services and Lending” report.

A number of factors are at play, Schnieper says. “Bot attacks have become more and more sophisticated over the years. In the past, many of these bot or scripted attacks had to be developed by each fraudster. Now fraudsters are able to download capabilities that automatically facilitate bot attacks. The ability to automate attacks across a far wider and more used set of devices (phone, tablet, laptop) has also increased, providing fraudsters a larger pool of potential targets.”

Overall, the report found that the cost of fraud for U.S. financial services and lending firms is between 6.7% and 9.9% higher than before the pandemic. For every $1 of fraud loss, U.S. financial services firms bore $4 in related costs in 2021, down slightly from $4.12 during Covid in 2020, but up 9.9% from $3.64 in pre-Covid 2020. For lending firms, the cost is $4.16 in 2021, down from $4.43 in 2020 during Covid and up from $3.90 in pre-Covid 2020.

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