If you’re like me, maybe you were confused when you read “The Crucible” by Arthur Miller in 10th grade English. What exactly was “the crucible?” I thought it was something we used in chemistry lab. That said, my 2021 fraud predictions have nothing to do with witchcraft – although 2020 has certainly conjured unprecedented challenges – and everything to do with the metaphorical crucible, “a place or situation in which concentrated forces interact to cause or influence change or development.” In 2021, I predict we will have a new crucible in which multiple intense economic and human conditions converge to create new, perhaps never-before-seen fraud scenarios.
Fundamental Changes Collide
Here’s what I mean. For the past couple of years I’ve blogged about my wallet diet, as I – and many other people – have made a considered journey toward going cashless. In 2020, that all went out the window. I’m not even sure if my wallet is thinner now; I don’t look for it much anymore, because during the pandemic I’ve rarely left my house. And when I have left my house, I’ve usually already paid for items and I’m just using curbside pickup. Yes, quarantine and lockdown have meant that even I, a reluctant Boomer, have gone mobile to the max with my transaction habits. Yup, that’s right, you can sometimes see me using an app to order food while parked in a designated spot rather than navigating thru a drive-thru and handing cash thru the window.
Now, with the COVID vaccine starting to roll out across the US, I still believe that certain economic conditions will get worse before they get better. Some industries will be reinvented and others will disappear. I believe that the only commercial activities that will come back, post-pandemic, are those serving humans’ needs for social interactions. Everything that has switched to being more digital will stay that way, joined by yet more activities.
Reinvention Will Become the “New Normal”
So what will happen? In the somewhere-in-the-future “new normal”, industries and people will need to reinvent themselves as a matter of survival. This will be painful, but eventually will result in a tidal wave of innovation. What exactly will those innovations be?
I predict there will be new ways of people socializing and transacting, which will create new opportunities for fraudsters. For example, who at the beginning of 2020 knew that a global pandemic would result in a threefold jump in fraud in medical equipment (such as personal protective equipment) and medical services?
The point is, as we propel into another year of the great unknown, the fraud crucible will keep delivering new fraud patterns, unpredictably. My colleague Doug Clare aptly points out in his 2021 predictions blog that the best way for financial institutions to keep ahead of rapidly emerging fraud patterns is to keep their guard up. Luckily, as Doug explains, the digital transformation work banks are doing will make this easier.
The Need for Connection Creates Vulnerability
Another social force to mix into the crucible: even though people may be connecting with others more, digitally, they are lonelier than ever. Mobile phone usage rose 70% globally during the pandemic, but unfulfilled by face-to-face contact, the human need to vocalize and engage with each other has only grown stronger.
However, as we ease into the “new normal,” consumer preferences for common in-person activities such as grocery shopping will continue to shift to socially distanced variants. More alone time makes people more susceptible to scams and other things. They might mistakenly reveal more information, which leads to more people falling victim to social engineering scams and money muling. And unfortunately, through the magic of mobile banking and instant payments, these folks may face the opportunity to lose their money even faster.
In sum, I predict that along with reinvention and innovation, loneliness and the speed at which money moves will be potent elements in the fraud crucible in 2021.
Consumers Will Wake Up to Data Privacy
But not all the news is bad. I believe there will be a final powerful element at play next year: consumers’ jolting awareness of data privacy, with subsequent moves to protect it. This trend will have a mitigating effect on the development of new fraud types.
Here’s why: Have you ever thought about pizza, and the next time you’re on social media, you’re bombarded by ads for pizza? I find it creepy, and apparently so do many other people. Even though targeted advertising has been around for years, along with ways to stop it, I predict that in 2021 there will be a backlash as consumers realize that incognito browsing is not just for data privacy aficionados and criminals. It’s a way to keep Facebook and Instagram from mining your deepest or most fleeting thoughts. I think we’ll all be talking about things like the Blaze browser and Duck Duck Go won’t just be reminding ourselves of childhood playground games.
What does that mean to banking apps? Banks will need to pay more attention to data access rights; financial institutions may need to rethink the ways in which they monitor and manage customer permission. Dr. Scott Zoldi, FICO’s chief analytics officer, has this to say in his AI 2021 predictions blog:
"With control of their own data imminent, as part of the Open Banking movement, in 2021 we will see consumers increasingly provide consent for specific, prescribed and constrained uses of their transaction data… In 2021, I predict we’ll see a higher standard for customer knowledge, consent and participation in the decision-making process, with respect to goods and services."
So how can social distancing, being alone, revealing too much personal information and becoming more vigilant about privacy all coexist at the same time, in the same space? One thing I remember from chemistry is that a crucible is essential for conducting volatile experiments – which we will see as multiple forces collide to create new fraud trends in 2021.
Keep up with my thoughts on fraud and financial crimes as the New Year unfolds. Follow me on Twitter @FraudBird.