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What are the biggest fraud threats for 2011?

The new year often brings new resolutions, new ideas and fresh perspectives. Unfortunately, fraudsters are not immune, and will also come up with new schemes and deceptions. So what can banks expect from fraudsters in the coming year?

The increased use of electronic deposits means that Remote Deposit Capture (RDC) fraud will continue to be a concern. As long as we have magnetic stripe cards, we will have card compromises. This includes the new wave of POS data compromises as well as ATM skimming compromises. (Check out a recent Insights white paper for tips on how to protect yourself.)

With the amount of malware out there, every computer your customer uses to interact with you has the potential to be compromised. Criminals will use new methods and techniques to target the money in the account in online banking and card-not-present transactions.

Expect that criminals will find their way around authentication and out-of-band communication techniques. For example, criminals are now initiating an online banking transfer, and blocking the real customer’s phone number by continually calling it during the authorization window (call it a mobile denial of service attack), and then contacting the bank to complain that the transfer did not take place.

And don't forget about first-party fraud, which is also known as ‘bust out’ fraud in the credit card world.  Financial institutions lose more to this type of fraud—criminals who come in as legitimate customers and turn into bad debt—than to third-party fraud (also known as account takeover). The growth of first-party fraud will likely continue due to current economic situation and because criminals will want to build on their successes in this area. (Once again, check out a FICO Insights paper to learn more.)

Whether it's 2011 or 2021, fraud is always going to change. The better prepared you are, the faster you can adapt and thwart criminals.  If you take away the profit incentive, criminals will go elsewhere.

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