Online payment fraud to double in next five years
Juniper Research predicts that online payment fraud will reach $48bn by 2023
Annual losses from online payment fraud will double in the next five years, to reach $48bn, according to Juniper Research.
A new study by Juniper Research shows that online payment fraud of eCommerce, airline ticketing, money transfer and banking services will rise from the $22bn losses projected for 2018.
Juniper's new research, Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2018-2023, claimed that a critical driver behind these losses will be the continued high level of data breaches resulting in the theft of sensitive personal information.
Juniper claimed that fraudsters are using information gleaned from these breaches to move away from pure identity theft, instead using fragments of real data to create new, synthetic identities.
With the global rise in instant payment schemes and a focus on transactional rather than behavioural risk, Juniper forecasts that money transfer would be particularly vulnerable, with fraud losses increasing by over 20% per annum to $10 billion in 2023.
"Synthetic identity is currently the low-hanging fruit because, even though it takes time for fraudsters to establish, many of their targets are not set up to detect the behavioural giveaways that indicate this type of fraud. Fraud management providers have solutions on the market to combat this, but the industry as a whole is playing catch-up," noted research author Steffen Sorrell.
Meanwhile, Juniper predicted that techniques practiced by the Magecart and Fin7 groups would become more common as fraudsters seek to create products from their knowledge. Here, the groups used a combination of malware and cross-channel approaches for criminal gain. The research noted, as a result, more complex fraud would only become more common as, in effect, a ‘fraud-as-a-service' economy emerges.
The report therefore recommended a holistic approach to fraud prevention. The procurement of omnichannel fraud prevention services and a strategy to assess and mititgate risk from a cybersecurity perspective will be critical for effective fraud prevention in the near to medium-term.
The Juniper study predicts a CAGR in fraud rates of 13% for all segments, apart from airline ticketing, where CAGR is forecast at 5.3%. While several airlines have suffered security breaches over the past 18 months, Juniper believes the stolen PII (Personally Identifiable Information) and payment card data will be leveraged in other market segments.
Juniper expects that one of the major drivers behind increases in fraud will be the shift to mobile transactions and services. Fraud detection cannot be treated in the same manner, which will expose many service providers to additional fraud.
The increase in instant payment mechanisms and mobile P2P money transfer services, make the money transfer segment a key target for fraudsters through social engineering, malware and app tampering. This will lead to transaction fraud in this segment growing at 23% CAGR.