Top 11 Fraud Trends & How to Prevent Them in 2024

In 2019, synthetic identity fraud emerged as the fastest-growing financial crime in the United States, imposing a staggering $6 billion cost on banks. Did things change in 2024? Well, let’s figure out by exploring the 11 most popular fraud trends this year and the latest fraud trends in banking.

The 11 Most Popular Emerging Fraud Trends in 2024

Before we can anticipate and fight the newest emerging fraud trends and scams, we’ve got to get a handle on what these top scam trends actually are. Also, when we understand the patterns, we can act proactively and set up effective fraud management strategies.

1. Application-to-Person (A2P) Fraud

What is it about?

A2P fraud occurs when a criminal uses applications to send messages, like SMS, directly to people’s phones, with a malicious purpose like phishing or spreading malware, for example.

Mobile fraud trends include more frequent use of tactics like phishing via texts or mobile applications, and social engineering techniques via mobile channels. In other words, mobile fraud trends are the ways scammers exploit weaknesses in mobile devices and mobile applications to commit financial crimes.

Why is A2P fraud popular and common?

Almost every adult has at least one mobile phone, and people use mobile apps and messaging services on these smartphones, this gives scammers plenty of chances to find weak spots, exploit vulnerabilities, and trick users.

How to spot it and stop it?

• Use strong authentication to make sure the sender is legit.
• Keep an eye on message traffic for unusual patterns or sudden spikes in volume.
• Use machine learning algorithms to find and block suspicious messages.
• Regularly update and patch your applications to address and fix security vulnerabilities.

2. Toll Fraud Rises Due to Increased Adoption of Cloud Communications

What is it about? 

Toll fraud occurs when scammers get unauthorized access to telecom services. This mostly happens through cloud-based systems. So instead of sending messages as in what happens in A2P fraud, toll fraudsters make phone calls and make money off it.

Why is it popular?

There is a direct correlation between the adoption of cloud-based systems and toll fraud. The more businesses switch to cloud-based systems, the more ways scammers can find to exploit these systems.

How do we detect it and prevent it?

• Keep an eye on call patterns for odd and unusual activities, such as sudden spikes in international or premium rate calls.
• Set up strict access controls and authentication to keep unauthorized users out.
• Audit and update your security settings on a regular basis to close any loopholes.
• Use a fraud deception system that analyzes call behavior and patterns to spot anomalies and block suspicious activity.

3. Synthetic Identity Theft

What is it?

Synthetic identity fraud is one of the most popular identity fraud trends. This type of fraud is different from traditional identity theft. Synthetic identity fraud takes place when scammers create fake identities using a mix of real and fake information. They mostly do so to open new accounts or take over existing accounts.

Why is this type of fraud so popular?

This is because synthetic identity fraud trends are hard to catch. Generally speaking, traditional verification methods struggle to detect these fabrications, which makes it desirable amongst fraudsters.

How to spot it and stop it?

• Use advanced identity verification methods, like biometric authentication and behavior analysis. 
• Implement multi-factor authentication (MFA) to add an extra layer of security for account access. 
• Monitor accounts continuously for unusual behavior or patterns. 

4. Card-not-present Fraud

What is it about? 

When someone makes unauthorized transactions using credit or debit card details without the card being physically present, this is called Card-not-present (CNP) fraud. CNP fraud trend mostly takes place during online or remote purchases or transactions.

When criminals exploit vulnerabilities in the financial system, we can analyze bank fraud trends not only to get valuable insights but also to respond and generate methods and tactics to protect institutions, customers, and investors from bank fraud trends.

Why is it trendy amongst scammers?

The answer lies in one word: e-commerce. ECommerce and online payments made CNP fraud trend more and more prevalent. When we analyze eCommerce fraud trends, we can get valuable insights intro current and merging fraud trends and threats, and hence we can detect and proactively prevent it.

Read more: E-Commerce Fraud: Detection, Prevention, Red Flags, & Future Trends

How do we detect it and prevent it?

• Use fraud detection tools to analyze transaction patterns and behaviors, looking for signs like unusually large purchases or multiple failed attempts.
• Implement address verification systems (AVS) and require card security codes (CVV/CVC) for authenticating CNP transactions.
• Educate your customers on safe online shopping habits and how to spot phishing scams or fake websites.
• Protect sensitive payment data with encryption and tokenization to block unauthorized access.

5. Account Takeover Fraud

What is it? 

Account takeover (ATO) occurs when an unauthorized individual gains access to a user's account by stealing login credentials. This can happen through different means, such as phishing, malware, or social engineering.

Current fraud trends in banking target online banking customers. Proactive measures like real-time transaction monitoring and multi-factor authentication are inevitable to combat the current fraud trends in banking like account takeover fraud and identity theft through data breaches.

Why is account takeover fraud widespread?

This type of fraud is on the rise because many people use weak or recycled passwords. Not only that, but also phishing attacks and malware have become more advanced, hence easier for hackers to snatch login details. 

Detection and prevention

• Use multi-factor authentication (MFA) to add an extra layer of security.
• Keep an eye on account activity for unusual login attempts or changes, like logins from unfamiliar places or devices.
• Educate users on the importance of strong, unique passwords and warn them about suspicious links or emails.
• Use anomaly detection systems that analyze user behavior and flag anything suspicious, like logins from unusual locations or at odd times.

6. Phone Scammers 

What is it?

This may sound similar to the aforementioned fraud trend; toll fraud. However, they are different in their methodology. While toll fraudsters use unauthorized use of telecommunications services, phone scammers depend mostly on social engineering tactics to decieve individuals into giving them personal or financial information over the phone. In most cases, these phone scammers pretend to be bank professionals or from government offices.

Why is phone scamming trendy?

With social media and online databases, phone scammers can get and dig up information on potential victims that can actually make their scams more convincing and real.

How to spot and stop phone scammers?

• Teach your customers and employees about common phone scams and associated red flags. For example, those unexpected calls that ask for personal or financial information.
• Use call blocking and screening technology to filter out known scam numbers and robocalls.
• Report suspicious calls to authorities or consumer protection agencies to help track them down.

7. Adoption of New Digital Payments and Methods

What does it mean?

This scam trend is about fraud linked to new digital ways to pay, like mobile wallets, cryptocurrency, and peer-to-peer payments. Scammers look for weaknesses in these new payment systems and exploit them for their own advantage. Many scams and online fraud trends require rapid advancements in technology and constant adaptation to address these online fraud trends effectively.

Why is it happening?

Scammers target those who use digital payments because they think these systems aren’t secure enough yet. They exploit these gaps in security and avoid getting caught. This is especially popular because of the rapid adoption rate of digital payment methods.

How do we detect it and prevent it?

• Use strong encryption.
• Keep an eye on your transactions for unusual transactions, like big payments, strange buying patterns, or lots of payment tries that fail.
• Use smart tools to catch fraud that monitor transactions.
• Teach your customers and employees to always check that sellers are legitimate.

8. Targeted Attacks

What is it?

In this fraud trend, cybercriminals use multiple complex methods, such as spear phishing, social engineering, and or malware, to break into organizations and people's systems.

Targeted attacks can be fraud and security trends, and for these fraud and security trends to be addressed, collaboration across different industries and departments in the same organization is crucial to implement unified proactive measures.

Why is it popular?

In comparison to indiscriminate or random attacks, targeted attacks have a higher chance of success because they try to exploit specific vulnerabilities or weaknesses in their targets' defenses. In other words, in targeted attacks, cybercriminals know what they are attacking and they aim at gaining access to certain valuable data and resources. 

How do we detect and prevent it?

• Use different security steps, like firewalls, systems that spot when someone’s breaking in, and protection right on your devices, to stop different ways attackers could get in.
• Check systems often for security issues and test how hard it is for someone to break in.
• Teach your team about the risks of targeted attacks and show them how to see tricky emails, links, or files that might be part of a sneaky plan.
• Use information about threats and share it with others to keep up with what’s new in targeted attacks and how to fight back.

9. Wire Fraud

What is wire fraud?

Wire fraud happens when criminals use electronic communication like emails and messaging apps to trick & deceive people or companies into sending money to fake accounts.

What makes wire fraud common among scammers?

First, the global reach of electronic communication channels makes it easy for scammers & cybercriminals to impersonate legit entities without raising suspicion. Second, the high level of anonymity associated with wire fraud makes it desirable amongst cybercriminals. 

How to spot and stop it?

• Use email checks, like SPF, DKIM, and DMARC, to make sure emails are really from who they say they are and stop fake emails.
• Use filtering and anti-phishing tools.
• Make rules to double-check payments and establish verification procedures, like dual authorization for high-value transactions. 
• Teach your team about common wire scams and show them how to see red flags & warning signs of fraud and check if payment requests are real before sending money and processing transfers.

10. Data Breach

What is a data breach?

This is a common type of fraud that takes place when unauthorized individuals get access to private or secretive information like personal data, money records, or business ideas. This usually happens through hacking into databases & systems.

Why is data breach popular?

Because of digitization and interconnectedness of systems and the amount of available data on the black market. 

How do you find it and stop it?

• Use strong security measures, like locking down data access and monitoring network activity, to protect private information and spot any unauthorized access attempts.
• Regularly inspect computer systems for issues and fix them quickly to prevent problems.
• Employ systems that detect unauthorized attempts to access networks or misuse information.
• Teach your team how to create strong passwords, secure sensitive data, and recognize phishing emails asking for confidential information.

11. Application Fraud

What is application fraud?

Application fraud is when people give false information on forms for financial requests like loans, credit cards, or insurance. They do it to get cash or benefits they’re not entitled to have.

Why is this happening?

Fraudsters dig application fraud because it can lead to big money and significant gains.

How to spot and stop it?

• Verify who’s applying by checking documents, using biometrics like fingerprints, or asking personal questions to confirm their identity.
• Use computer tools that sniff out odd patterns or information in applications that might signal fraud.
• Closely study the applicants’ backgrounds and financial histories to gauge if they’re trustworthy.
• Teach your team about the signs that someone might be bending the truth on an application. Show them how to spot and double-check applications that seem fishy.

How Can FOCAL Help?

FOCAL is an AI-driven platform for AML compliance and fraud prevention that helps financial institutions by

1. Analyzing banking fraud trends and patterns and detecting anomalies in transaction data.

2. Utilizing predictive analytics to anticipate potential fraud.

3. Monitoring customer behavior for deviations from normal patterns.

4. Conducting real-time monitoring for immediate detection and response.

5. Enriching data with external sources for comprehensive analysis.

6. Continuously learning and adapting to new banking fraud trends and techniques.

Conclusion

In conclusion, organizations can enhance their resilience against not only the latest fraud trends in banking but all the various fraudulent activities and protect their assets, reputation, and customers' trust by adopting the right technology that can streamline and automate their processes. The latest trends in fraud activities suggest a shift towards advanced cyber schemes, and it is recommended to invest in advanced technologies like FOCAL Fraud Prevention solution and for analysts to closely monitor these latest trends in fraud activities.

Read more about 'Mastering Fraud Prevention: A Comprehensive Guide for KSA and MENA Businesses' in our latest ebook to learn more. This guide helps you stay informed about the latest fraud management trends to address evolving threats and strengthen your fraud prevention measures proactively.