Simple Ways You Can Prevent Gift Card Fraud in 2024

In an era where convenience comes hand-in-hand with security risks, businesses and consumers have to be vigilant. One such risk is gift card fraud, and it has become a massive concern for businesses and consumers alike. Digital transactions are on the rise, and cybercriminals are becoming more and more sophisticated. This is why it’s more important than ever to safeguard against fraudulent activities surrounding gift cards.

In this guide, we’ll be diving deep into the landscape of gift card fraud in 2024 and explore how businesses can prevent it.

What is Gift Card Fraud?

Gift card fraud includes various illegal activities that fraudsters conduct by exploiting vulnerabilities in the gift card system. 

These activities can range from simple scams to complex cyberattacks. Each of these activities can pose significant risks to both businesses and consumers. Here’s a list of the most common forms of gift card fraud:

  1. Phishing Scams

Cybercriminals often use phishing emails or text messages to trick unsuspecting customers into divulging their gift card information, such as card numbers and PINs, under the guise of a legitimate request.

  1. Card Skimming

Fraudsters deploy skimming devices at point-of-sale terminals to capture gift card data when customers make purchases. These skimming devices help fraudsters make clones of gift cards and use them for fraudulent activities. 

  1. Account Takeover

Hackers exploit weak authentication measures or stolen credentials to gain unauthorized access to gift card accounts. This way, fraudsters can make unauthorized purchases or transfer funds.

  1. Return Fraud

Fraudsters exploit lenient return policies by purchasing gift cards with stolen credit cards, using them, and then returning the items for cash refunds.

Prevention Methods & Solutions

To mitigate the risks associated with gift card fraud, businesses, and consumers must adopt proactive measures and utilize innovative solutions tailored to their industry and their businesses. Here are several effective prevention methods and solutions for combating gift card fraud in 2024:

1. Enhanced Security Measures

One of the best ways to prevent gift card fraud is by implementing robust security protocols. You need to implement end-to-end encryption and tokenization to safeguard gift card data throughout the transaction process. 

Businesses need to utilize advanced authentication methods, including biometric verification and multi-factor authentication, to prevent unauthorized access to gift card accounts.

2. Educating Consumers

Businesses can prevent gift card fraud by educating consumers about the standard methods fraudsters use. Businesses should also educate customers on how to identify and avoid potential scams. 

Encourage customers to exercise caution when sharing gift card information online and emphasize the importance of keeping personal and financial data confidential.

3. Transaction Monitoring

Another way to prevent gift card fraud is to deploy real-time monitoring systems capable of detecting suspicious activities. Monitoring suspicious activities includes verifying unusual purchasing patterns or multiple failed login attempts and other unusual activities with the gift card.

Implement automated alerts to notify businesses of potential fraudulent behavior, enabling prompt intervention and mitigation.

4. Fraud Detection Algorithms

Businesses that have a considerable amount of technological resources at hand can use advanced fraud detection algorithms. Based on machine learning and artificial intelligence, these algorithms analyze transaction data and identify anomalies indicative of fraudulent activity.

Businesses can continuously refine and update these algorithms based on emerging trends and evolving threat vectors to enhance detection accuracy.

5. Secure Authentication Processes

Businesses must implement secure authentication processes, such as requiring PIN authentication or verifying identity documents.

This is done to prevent unauthorized individuals from redeeming stolen or compromised gift cards. Utilize secure payment gateways and partner with reputable vendors to minimize the risk of fraud during redemption.

6. Regular Security Audits

Conduct regular security audits and penetration testing to identify vulnerabilities in the gift card systems. Finding vulnerabilities in the system helps businesses to build more robust processes. 

Collaborate with cybersecurity experts and industry regulators to ensure compliance with relevant standards and regulations

7. Customer Support & Fraud Reporting

Provide timely and responsive customer support services to assist individuals who suspect fraudulent activity involving their gift cards. Establish clear procedures for reporting suspected fraud and collaborate with law enforcement agencies to investigate and prosecute perpetrators.


Gift card fraud poses a significant threat to businesses and consumers alike. Companies can prevent this fraud by using a multifaceted approach. By implementing enhanced security measures, educating consumers, deploying advanced fraud detection technologies, and fostering collaboration across the industry, businesses can effectively combat gift card fraud in 2024 and beyond.


Understanding Digital Wallet Fraud

In an era dominated by technology, digital wallets have emerged as a convenient and efficient means of managing finances. With the ability to make seamless transactions, pay bills, and even store identification documents, digital wallets have become an integral part of our daily lives.

However, with great convenience comes great responsibility, as the rise of digital wallet fraud poses a significant threat to users’ financial security.

In this blog post, we will delve into the world of digital wallet fraud, exploring what it is, how it happens, and most importantly, how you can protect yourself from falling victim to such cybercrimes.

Understanding Digital Wallet Fraud

Digital wallet fraud involves unauthorized access or manipulation of a user’s digital wallet to carry out fraudulent transactions or gain sensitive information. 

This can occur through various means, including phishing, malware attacks, and identity theft. Criminals are constantly evolving their tactics, making it crucial for users to stay informed about potential threats and take proactive measures to secure their digital wallets.

Common Types of Digital Wallet Fraud

1. Phishing Attacks

Phishing is a prevalent method used by cybercriminals to trick users into revealing their login credentials or sensitive information. In the context of digital wallets, phishing may involve fraudulent emails, messages, or websites that mimic legitimate platforms to deceive users into providing their wallet details.

2. Malware and Mobile App Attacks

Malicious software or apps can compromise the security of digital wallets. Once installed on a user’s device, malware can capture login credentials, access personal information, or even take control of the digital wallet itself. Users should exercise caution when downloading apps and regularly update their security software to prevent such attacks.

3. Identity Theft

Cybercriminals may engage in identity theft to gain unauthorized access to digital wallets. By obtaining personal information through various means, such as social engineering or data breaches, fraudsters can manipulate security measures and take control of a user’s digital wallet.

4. Account Takeover

In an account takeover, cybercriminals gain access to a user’s digital wallet by obtaining login credentials through various means. This could include using leaked passwords from other online accounts or exploiting weak authentication methods.

How to Prevent Digital Wallet Fraud?

1. Use Strong Authentication

Strengthen your digital wallet security by enabling multi-factor authentication. This adds an extra layer of protection by requiring additional verification steps beyond just a password, such as a one-time code sent to your mobile device.

2. Keep Software Updated

Regularly update your digital wallet app and the operating system of your device. Developers often release updates to patch security vulnerabilities, and staying up-to-date is crucial for safeguarding against potential exploits.

3. Beware of Phishing Attempts

Be cautious of unsolicited emails, messages, or links asking for your digital wallet information. Legitimate service providers will never request sensitive details through email or messaging apps. Verify the authenticity of communication by directly contacting the company through official channels.

4. Secure Your Devices

Use strong, unique passwords for your digital wallet and regularly update them. Additionally, secure your devices with biometric authentication, such as fingerprint or facial recognition, to add an extra layer of protection.

5. Monitor Your Accounts

Regularly review your digital wallet transactions and account activity. If you notice any suspicious or unauthorized transactions, report them immediately to the digital wallet provider and take appropriate action to secure your account.

6. Educate Yourself

Stay informed about the latest trends and techniques used by cybercriminals. Awareness is a powerful tool in preventing digital wallet fraud. Familiarize yourself with common scams and be vigilant to protect your financial assets.


As the digital landscape continues to evolve, so do the threats associated with digital wallet fraud. Users must remain vigilant and proactive in securing their digital wallets to safeguard their financial well-being. By understanding the common types of fraud, implementing robust security measures, and staying informed about potential risks, individuals can enjoy the convenience of digital wallets without compromising their financial security.

Remember, the key to preventing digital wallet fraud lies in a combination of awareness, technology, and responsible digital habits.

Frequently Asked Questions

  1. 1. What is digital wallet fraud?

    Digital wallet fraud involves unauthorized access or manipulation of a user's digital wallet to carry out fraudulent transactions or gain sensitive information. It can occur through various means, including phishing, malware attacks, and identity theft.

  2. 2. How can I protect myself from digital wallet fraud?

    Use strong authentication methods, such as multi-factor authentication.

    Keep your digital wallet app and device software updated regularly.
    Be cautious of phishing attempts and never share sensitive information through unsolicited emails or messages.

    Secure your devices with strong, unique passwords and biometric authentication.

    Monitor your digital wallet transactions regularly and report any suspicious activity promptly.

  3. 3. What is multi-factor authentication, and why is it important?

    Multi-factor authentication (MFA) is a security method that requires users to provide multiple forms of identification before gaining access to their digital wallets. This typically involves something you know (password) and something you have (mobile device for receiving a code). MFA adds an extra layer of protection, making it more difficult for fraudsters to access your account.

  4. 4. How can I recognize phishing attempts related to digital wallets?

    Be wary of unsolicited emails or messages requesting your digital wallet information.

    Verify the legitimacy of communication by contacting the company directly through official channels.

    Check for grammatical errors or inconsistencies in the communication.

    Look for secure website indicators, such as “https://” in the URL, before entering any login credentials.

  5. 5. Can malware compromise my digital wallet?

    Yes, malware can compromise the security of your digital wallet. Malicious software can capture login credentials, access personal information, or take control of your digital wallet. To prevent this, avoid downloading apps from untrusted sources, keep your device's security software updated, and regularly scan for malware.

  6. 6. What should I do if I notice unauthorized transactions in my digital wallet?

    If you observe any suspicious or unauthorized transactions, take the following steps:

    – Immediately report the issue to your digital wallet provider.
    – Change your passwords and update your security settings.
    – Contact your bank or financial institution to report the fraudulent activity.
    – Consider freezing or closing the affected digital wallet account if necessary.


Contactless Payment Scams

Contactless payments through cards are hugely popular within the UK – in fact, they’ve now overtaken chip and pin payments. Contactless payments increased by 30% between June 2017 and June 2018 – and 52% of all shop payments were contactless in July 2018. Overall, there were 7.4bn contactless payments in 2018.

Around 7 in 10 payments in the UK are contactless, and 17% of 25 – 34-year-olds make only one monthly payments using cash – or rely entirely on cards to make payments.

One of the reasons for the increased popularity of using contactless cards is they’re easy and simple to use to pay for a variety of goods. By removing the need for a PIN code, contactless cards do offer a fast and convenient way to pay – however, they may also offer criminals the opportunity to commit fraud.

Below, we look at the facts behind contactless cards, how fraudsters can take advantage and the best ways to avoid becoming a victim of credit card fraud.

How do contactless cards work?

Contactless cards contain both a chip and an antenna that is used to carry out the transaction. When you hold your card on or near a card reader, the retailer’s card reader sends out a signal which is picked up by your card’s antenna. The chip inside your card contains information about your account and by using this information, the card reader can process its payment.

Payments are currently limited to a maximum of £30 (it was previously £20), and are typically used for small retail purchases. There can sometimes be a problem with “card clash” which is when two contactless cards, either payment cards or travel cards like Transport for London’s Oyster Card, both interact with a card reader at the same time.

Contactless payments are also quicker because payments are processed in batches.

How widespread is contactless card fraud?

It may seem like contactless technology allows fraudsters an easy way to access your money without a PIN. Assuming you take precautions to protect your card, the chances of it happening to you are reduced – however, consumers are right to be vigilant as cases of contactless card scams doubled in 2018.

Because contactless payment technology currently limits the value of purchases, the total potential value of fraud involving these cards is reduced. Thieves are always looking for big payouts, which are limited by contactless scams.

However, there’s also been recent research that shows that the £30 maximum spend on contactless cards can be bypassed. Researchers have found that the flaws in the payment system for some contactless cards could potentially allow criminals to steal hundreds of pounds in a single transaction.

The hack the researchers used to “break” the £30 limit uses a device which intercepts the signals between the card and the card reader. It then simultaneously ‘tells’ the card that no verification is needed and the card reader that verification has been provided.

Another purported method that fraudsters use is to actually process payments by standing near someone on a train or in another crowded public place and reading their contactless card through their clothes. However, according to Which? there’s little evidence that this type of fraud is common.

How to avoid and report contactless card fraud?

Contactless card fraud is on the rise; in the first half of 2018, thieves stole more than £8 million from contactless scams.

You can minimise the chances of becoming a victim of contactless fraud by following these steps:

  • Don’t keep your cards in easily accessible pockets or bags which will draw pickpockets’ attention.
  • Line your wallet or cardholder with tin foil to block scamming devices from reading your card. If you don’t fancy the DIY approach, there are products like RFID readers available which do the same thing.
  • Don’t let anyone take your card out of sight while taking a payment – even for just a few seconds. They could be using a skimming device to copy data from your card’s magnetic strip.
  • Don’t give your friends your card to make payments – always make sure you’re there for all transactions.
  • Ask for a receipt to make sure you were charged the correct amount.
  • Keep a close eye on bank statements and your credit report to look for any unusual activity.
  • Report any lost or stolen cards as quickly as possible. There is a limit on how many times you can use a contactless card before requiring a PIN, which stops criminals from carrying out a large volume of small transactions of up to £30 each – however, it’s best to not wait for the card to be blocked.


Hyper-Personalization for Fraud Prevention

Hyper personalization is a game changer for businesses looking to improve customer lifecycle and fraud management. 7 out of 10 consumers expect a personalized experience from businesses. But, the current personalization methods are full of gaps.

Businesses that use digital marketing to acquire and serve customers are the ones moving towards hyper-personalization. Hyper-personalization is a supercharged version of personalization that uses real-time customer data, AI, automation & predictive behavior analysis. The results are different for companies that use real-time personalized customer experiences.

Several banks, financial institutions, and other finance businesses are also looking to step up their personalization program. 

If done right, hyper-personalization is the key to fraud management and fraud prevention. Hyper-personalization has the power to transform the consumer’s experience of fraud controls. As it uses a data-centric approach, banks, and other businesses will be able to implement strong fraud controls across the customer journey.

This is essential as fraudsters have become a part of every single customer-business touchpoint. There are thousands of ‘moments’ in a customer journey where a decision will be able to figure out whether a fraud, a scam, or a legitimate activity is taking place.

Using Data To Take Right Decisions

Whenever businesses come across an event that can be fraud, several decisions can be made to determine whether the activity is legitimate or fraudulent. The series of decisions can be:

  • Is it a new device?
  • Is an OTP needed?
  • Is there a risk of a SIM swap?
  • Is a biometric check needed?
  • Is the customer moving money using a unique channel?

To find answers about these decisions, there are multiple datasets about the customer, their accounts, their email, their mobile, their biometrics, etc. To deliver a hyper-personalized experience, the right data and insight must be delivered to the right decision, at the right time to enhance the customer experience.

Current fraud prevention methods tend to focus only on the negative indicators from the database and these negative indicators point towards a potential fraud or scam event.

Getting Rid of Functional Silos

For businesses to achieve hyper-personalization, the context needs to be available across all points through the customer journey. Fraud solutions with banks and financial services are too often deployed in isolation from other touch points in the customer journey. While the fraud prevention journey should be a part of the entire customer journey, the current methods are separate.

The decisions that need to be made and the treatment paths that are taken should be interlinked and consistent throughout the customer journey.

This will better inform the next best decision, whether it is about declining or holding payment, and how they communicate with the customers often.

Make Your Customer a Part of the Fraud Department

Customers play the biggest role in the fraud prevention process. Having clear & consistent communication is a crucial element for this hyper-personalization to work. 

With the rise of communication channels, more and more customers have received a communication that they believe was a scam. Traditional strategies such as post-transaction verification checks delivered via message is delivered through SMS are usually ineffective.

During a scam, the person initiating the transaction is a legit customer, and a simple “Is this you?” can only met with an affirmation. There’s no option to highlight if the legit user is under the control of a fraudster who may be telling them to ignore such messages.

Every bank and financial institution should have ‘moments’ of intervention where a customer has the opportunity to change a customer’s course of action. The channel, clear messaging, and the timing of the intervention have to be right. 

According to data, customers respond better to a series of timely conversational messages that are clear and relevant, instead of a single ‘Yes or No’ text. 

By delivering the right message at the right time, through the right channel, hyper-personalization will help organizations get rid of noise and deliver customers exactly what they need.


5 Types of Subscription Fraud

Subscription fraud is one of the least common types of fraud faced by communications service providers. Even if the problem is small, it has a huge impact. The problem has grown by nearly 6% from $1.92B to $2.03 billion.

In this guide, we’ll outline the 5 most common types of subscription fraud that communications businesses face.

What is Subscription Fraud?

Subscription fraud can be a symptom of a gateway to other frauds. For example, fraudsters can create a synthetic identity to create a fraudulent subscription. This also helps fraudsters build a fake identity associated with a phone number.

These identities are then used to defraud banks, financial institutions, and other entities.

Apart from this, subscription fraud also continues in traditional ways, such as people who subscribe but don’t intend to pay. Or a type of fraud that seeks to acquire incentivized devices falsely just to sell them online.

Types of Subscription Fraud That Communications Businesses Face

1. Fraud Shown as Bad Debt

There is a type of fraud where fraudsters show themselves as bad debtors. More than 40% of the experts CFCA surveyed say less than 10% of the bad debt is actually due to fraud.

However, whether the Communications service providers have a way to differentiate between bad debts from scams may challenge this statistic. 

If a fraud is categorized as bad debt, it won’t be investigated or stopped. This means scammers can return over and over again to different service providers with different types of frauds with little concern of being caught.

2. Fraudsters Hide Among False Positives

Fraudsters take advantage of the fact that CSPs don’t share fraud data among themselves. While the financial industry has started sharing liability data to prevent a single fraudster from tricking the system again and again, CSPs are yet to do that.

No company wants to share insider information with its competitors, but to prevent fraud, collaboration is essential.

While Communication Service Providers have managed to reduce the number of false positives, others are struggling. According to reports, fraud management systems tend to detect fraud with an average false positive rate of either 13% or 88%.

26% of the fraud management systems spend an average of 20 hours per week on researching false positives. What makes things even worse is that around 52% report using no third-party data to help gain insights required to differentiate between real fraud from false positives.

3. IoT Based Subscription Scams

The risk of fraud in the Internet of Things (IoT) is clear from CFCA’s survey. Only 41% of service providers are actively checking for fraudulent activity in IoT data. The survey reveals that Distributed Denial of Service (DDoS) attacks, misuse of unlimited data services, and SIM swaps are the most common methods used for IoT-related fraud. This indicates that criminals have a relatively easy time exploiting the growing IoT landscape, as it lacks adequate defenses. This vulnerability can lead to serious crimes, such as using SIM swaps to gain control of personal bank accounts.

4. Back-Office Inefficiency-Based Subscription Fraud

Inefficiencies in the back-office and the use of isolated systems are causing an increase in fraud losses. Various departments, such as sales and marketing, credit risk, fraud, and collections, often operate on separate systems. 

Although each department collects valuable information, they rarely share this data. This presents two problems for fraud teams: they may make poorly informed fraud decisions, and they might create inconvenience for customers by requesting information that another department in the organization already has.

Fraud teams are also taking on broader responsibilities. According to CFCA, 39% of fraud teams now handle customer service tasks, and 20% are involved in sales and marketing. This expanded role for fraud managers becomes challenging when they have limited access to information due to siloed systems.

This issue is exacerbated when different departments have conflicting goals, as is often the case for sales and fraud management. Salespeople are motivated to close deals, while fraud departments aim to prevent fraudsters from exploiting the sales process and marketing incentives to steal subscriptions and devices. 

Since it’s impractical to turn salespeople into fraud experts, it’s crucial to implement built-in real-time fraud controls in the sales process to maintain a balance between maximizing sales and minimizing fraud.

5. Streaming-Focused Subscription Fraud

For many years, Communication Service Providers (CSPs) worldwide have been striving to offer a variety of services, moving beyond traditional communications to focus on broadband and content. However, the landscape of content consumption has evolved, with streaming becoming the preferred method for accessing video content.

Major streaming services, with Netflix being a prominent example, have often turned a blind eye to customers sharing passwords with non-subscribers. This leniency was understandable during the phase of acquiring customers and building brand awareness. However, as these markets mature and approach saturation, the focus shifts to revenue assurance, highlighting the issue of subscription fraud.

While being lax about password sharing may have made sense in the early stages, it can now pose a barrier to revenue growth. This shift in attitude toward password sharing can have negative repercussions on stock prices and valuations, especially when streaming services fall short of their subscriber addition targets.


Introductory Guide to Phishing Emails – Common Techniques and Prevention Methods

Phishing scams are becoming more and more common. Every day hundreds of people around the globe face many problems with phishing emails. Understanding how phishing emails work can go a long way in helping you prevent phishing attacks. 

In 2014, Sony Picture Entertainment became the victim of a major phishing attack. During that time, hackers sent phishing emails to top executives of Sony Pictures, the emails that looked like they appeared from Apple, contained a malicious link that prompted users to enter their Apple ID information into an online form. 

Over time, criminals stole over 100 terabytes of sensitive information. The overall attack cost Sony more than $100 million. 

Phishing scams gained traction in 2021, over 83% of all organizations experienced similar attacks. 

In this guide to anti-phishing, we’ll take an in-depth look at what phishing is, how it works, and the different techniques used for phishing scams.

What is Phishing?

Phishing is a type of social engineering. It happens mostly in emails. In phishing emails, the primary objective of scammers is to trick legitimate users into revealing confidential about themselves or their organizations.

In a phishing scam, attackers may trick victims into clicking a link that will lead them to a fake website. The website will ask you to enter sensitive information. Other types of scams involve directing victims to download attachments that will infect their devices with dangerous malware or ransomware.

Any domain can become the victim of a phishing attack. This is because a huge number of people use the same username and password on multiple accounts. 

According to Google’s 2019 security survey, 65% of people reuse passwords for multiple accounts. Over 60% of people keep using the same password even after a data breach.

Most phishing attacks happen with fake email messages that pretend to come from a legitimate company. Attackers also use text messages, social media platforms, or phone calls to achieve the same goal of accessing sensitive information.

How Does Phishing Attacks Work?

Based on the FBI’s 2020 Internet Crime Report, phishing was the most common cyberattack type in 2020. By 2021, it had become one of the biggest concerns for IT professionals.

Modern phishing attacks have become highly sophisticated. You may have heard of the Nigerian prince scams, it’s one of the oldest phishing scams. The scams of today use several skillful social engineering tactics to manipulate victims and steal personal information.

The best scammers impersonate legit organizations, make lookalikes of their email addresses, and send emails to look like they’re from the real organization. 

The fake emails often contain a malicious link to track the activity of the victim and to steal the user’s personal information. 

The links can also lead to malicious websites that can infect the victim’s device and track all user activity.

Commonly Used Phishing Techniques

Here are some of the most commonly used phishing techniques that are commonly used by scammers.

  1. Bait Creation

Scammers create messages, and emails that look and feel legitimate and trustworthy. They often mimic well-known companies, government agencies, or businesses to trick recipients into thinking that the text is genuine.

  1. Social Engineering

Phishers use psychological techniques to manipulate the recipient’s emotions and push them to take action.

They may also create a sense of urgency, curiosity, fear, or excitement. This surge of emotion is what compels recipients to take immediate action without thinking.

  1. Deceptive Content

Phishing emails contain links or attachments that when clicked and opened can lead to malicious websites or infect the devices of victims. On first look, these links and attachments look real, but they’re designed to steal login credentials and personal information.

  1. Fake Websites

Scammers make up fake websites that look like the real websites of big brands. For example, a user receives an email from about a discount offer with a link to the product. Once the user clicks on the link, they’re redirected to, when they should be led to This is a common scam that happens to thousands of users every year.

Once the victim places the order and enters their banking information, all the information is stolen and the money is lost forever.

  1. Credential Theft

Fake websites prompt victims to enter the usernames and passwords of specific accounts. Once this information is added, the scammer steals the information and uses it to conduct scams.

Types of Phishing Attacks

The most common types of phishing techniques include:

  1. Standard Email Phishing

The scammer shares several fake emails asking the receiver to share personal information or login credentials. These attacks are aimed at large organizations as most employees have limited phishing awareness.

  1. Spear Phishing

This particular attack targets specific individuals. Attackers assume the identity of a real organization. The attacker then sends personalized emails to the target. As the text often includes specific details about the victim, it appears authentic. Over time, the victim trusts the email sender.

  1. Whaling

A whaling attack targets ‘big names’ such as high-level executives. It involves sophisticated social engineering methods to trick the victims into transferring large amounts of money into the attacker’s bank account. 

  1. Business Email Compromise (BEC)

The attackers send fraudulent emails by building a lookalike email of the account owner’s email address to attempt and steal money from the company.

  1. Malware Attacks

In a malware attack, the attacker tricks the victim into downloading an attachment or files that contain malware. As soon as a user downloads and opens the attachment, it installs malware on the device.

How to Mitigate Phishing Scams?

Businesses can protect their people and information assets from phishing attacks by simply following these simple practices:

  • Implement email security software to protect devices from malicious domains. Also, use anti-virus software to scan all emails and attachments.
  • Use training and phishing simulations to teach your employees common phishing techniques and how they work. 
  • Make sure that you always use strong passwords and multi-factor authentication to secure accounts and devices.
  • Discourage users from sharing or reusing the same passwords to minimize the possibility of credential theft.
  • Ask users to use a password manager to generate and store their passwords. 
  • Prevent users from opening emails and attachments from unknown and suspicious senders.
  • Educate users on the common “red flags” that are a sign of a phishing attempt.

Third-Party Fraud – Definitions and Examples

Third-party fraud is when a fraudster uses an individual’s or company’s information to commit fraud. Third-party fraud is more commonly known as identity theft. It is the type of fraud that impacts most individuals across the globe every year.

In 2023 alone, over 1.4 million cases of identity theft were reported to the FTC. The number is expected to double by the next year.

Third-party fraud is committed by all types of criminals – from individuals trying to use a stolen credit card or take out a loan in somebody else’s name.

While third party fraud usually involves using someone else’s personal information to commit fraud, some fraudsters also use synthetic identities.

The primary victims of third-party fraud are financial institutions, retailers, eCommerce stores, and, of course, the people whose identities have been stolen.

Difference Between Third-Party, First-Party, and Second-Party Fraud

If you want to know how third-party fraud differs from first and second-party fraud, it helps to understand the other types:

  • First-party fraud is committed by a person or a company in their own name. Most common examples of first-party fraud include falsifying information for credit applications, claiming dishonest refunds, or disputing legal transactions to claim chargeback fraud.
  • Second-party fraud involves using an individual’s or company’s details. But the fraud is committed by someone who has given those details voluntarily. Someone may allow their account to be used for money laundering, or they may work with a fraudster in a “fake merchant” scam.

In both first-party and second-party fraud, the legit holder of the details (or accounts) is involved in the fraud. In third-party fraud, the individual or the company whose details are being used has no idea that their information has been stolen.

Types of Third-Party Fraud

Third-party fraud comes in all shapes and sizes, and fraudsters constantly work to find new and inventive ways to commit the fraud.

Some of the most common types of third-party fraud include:

  • Account takeover fraud – As the name suggests, this type of fraud involves criminals gaining access to individual bank accounts. Then, they use the bank account to make purchases or divert funds.
  • Credit Card Fraud – Credit card fraud involves all kinds of frauds that happen due to stolen or cloned credit cards. Once a fraudster illegally obtains a credit card, they use it to make purchases or take cash loans.
  • New Account Fraud – This type of fraud involves fraudsters opening new accounts using stolen personal details. New account fraud can also happen with synthetic identities or by combining fake and legitimate information.

Examples of Third Party Fraud

Here are some of the best real-life examples of third-party fraud:

  • In 2017, a fraudster named Kenneth Gibson opened around 8,000 false PayPal accounts in the names of employees of a company he worked for in the past. He kept moving money around in small amounts, which he withdrew via an ATM. It was the repeated trips to the ATM that led to the discovery of the fraud.
  • Anthony Lemar Taylor stole the identity of golfer Tiger Woods, initially by fraudulently obtaining a driver’s license in his name. He used the stolen identity to purchase goods worth $17,000, which included a car and a 70-inch TV. Eventually, he was caught and sentenced to jail.
  • In 2018, fraudster David Matthew Read went on a $169,000 “shopping spree” using a replacement American Express Black card that he managed to obtain in the name of the actress Demi Moore.

While these fraudsters got caught, a huge number of third party fraud goes undetected and unpunished. However, a vast amount of third-party fraud goes unpunished.

Third-Party Fraud Trends

Businesses like banks, credit reference agencies, and card providers are the ones who report new trends in third party fraud.

In January 2023, Experian reported that third-party fraud was growing in relation to current accounts, savings, card, and loan accounts.

One particular trend is an evolution in fraudster’s methods to collect personal data they need to carry out the scams. Trends include:

  • Fake job advertisements
  • Messages pretending to be family members
  • Fake investment schemes
  • Message about fake government assistance grant schemes
  • Emails pretending to be businesses.

Some other fraudsters look to take advantage of the popularity of crypto investments and use underground fraud as a service.

How to Prevent Third Party Fraud?

Preventing third-party fraud is becoming more and more important for both individuals and businesses.

The basics of preventing fraud, such as using complex and unique passwords, installing cybersecurity software, and being vigilant when using public WiFi networks, are important. Educating your user base on how to stay vigilant is also important.

A huge number of third-party fraud happens due to human error. People need to be trained to recognize spam emails and fake websites.

Businesses should think about investing in third-party software that helps verify the identities of businesses and consumers.


Application fraud

Let’s just agree on one thing – digitization has changed the financial sector for the good. No more waiting hours, no more visiting brick-and-mortar locations, and the ability to do things instantly.

But, there’s a downside to doing everything digitally. Without face-to-face interaction, businesses become open to application fraud. As banks can’t see the person that’s behind the screen, fraudsters can easily commit fraud. 

This is a challenge that financial institutions, realtors, creditors, and other businesses face every day. Even a miniscule miscalculation on the business’s end can lead to huge losses. 

Fortunately, there are ways to protect businesses against application fraud. In this article, we’ll go over everything about application fraud.

What is Application Fraud?

Application fraud is when an applicant submits false information to a business for approval. This can include misrepresenting personal or financial information, including:

  • Falsifying employment history
  • Inflating income
  • Providing fake ID documents
  • Misrepresenting credit history

The biggest example of application fraud is when an individual for credit cards, loans, or other products. A fraudster would use fake information about their financial information, employment, or further relevant details. 

If everything goes the fraudster’s way, they will have access to a credit card or a loan that they can use to conduct other financial frauds.

How do fraudsters get access to the fake information? Well, just in 2023, over 4.5 billion personal information records were stolen. 

Technology has made it easier than ever to steal personally identifiable information.

How is Application Fraud Committed?

Consumers want instant financial services. So, banks, credit unions, and other financial institutions offer digital products to keep up with customer demands.

Processing online applications puts businesses at a risk of being defrauded. When a person applies for a credit line or loan, they expect a seamless process. To make this happen, companies offer fast approval times. These fast approval times lead to mistakes and invite fraudsters to commit third-party fraud.

When committing third-party fraud, criminals will fill out applications under someone else’s identity trying to trick the organization. If a fraudster has enough information at hand, they can trick the systems. 

By the time the company or the individual figures out the fraud, it’s too late. Because of digitization, criminals can submit fraudulent information to as many companies as they want. This is only possible because of advanced tools like bots, cloud infrastructure, and virtual machines.

This is likely why loan application fraud is growing.

Common Methods Criminals Use for Application Fraud

There are a number of ways scammers use to commit application fraud. One of the most common ways is using synthetic identities.

It’s challenging to identify the type of fraud when businesses allow online application submission and application of ID documents. But how do scammers collect this personal information and commit application fraud?

1. Breaching Databases

Data breaches happen to businesses of all scales. Some happen intentionally, while others happen by accident. Accidents such as an employee can create an insecure password. Or leave the password at a place where anyone can access it. 

It’s highly common for data breaches to happen when hackers blatantly target an entity to breach their database. Fraudsters use a number of technologies to break into a company’s database. They often use bots that insert millions of variations of a password to brute force a password. 

Once a data breach happens, millions of data records can be stolen. Common data includes:

  • Names
  • Date of birth
  • Addresses
  • Phone numbers
  • Account details

2. Targeting Call Centers

The Internet isn’t the only way criminals are stealing identities. One of the second most used methods is using call centers. Unfortunately, voice isn’t enough to determine someone’s identity, making it another easy target for fraudsters.

As there’s no way to detect synthetic identities or fraud patterns, criminals can easily use it to their advantage. 

3. Intercepted Mails

Intercepting emails are more sophisticated than stealing envelopes from mailboxes and hoping to grab something valuable. Criminals today use USPS informed delivery while applying for credit cards. This is a service that USPS offers to allow users to track mails and packages before they are delivered.

This notifies the scammer when the credit card will be delivered so they can snatch it before the legit customer has a chance to see it. 

4. Using Cloud Infrastructure

Criminals also use virtual spaces to commit identity theft and application fraud. This includes using the same cloud services businesses use daily. Fraudsters use the cloud to run automated scripts and bots to conduct large-scale fraud attacks.

Bots can also be used to brute force attacks by hacking into accounts by entering different variations of PINs and passwords. It’s not uncommon for fraudsters to search for available credentials. This is when fraudsters use a collection of personally identifiable information.

How to Detect and Prevent Application Fraud?

  1. Security Measures for In-House Personnel

Employees are the first line of defense against fraudulent attempts, so they should be educated about fraud applications. To detect and prevent application fraud, businesses should educate employees on:

  1. Machine Learning Solutions

Artificial intelligence and machine learning are revolutionizing the industry. AI and ML technologies can make it possible for companies to detect and prevent various types of fraud. Financial institutions use rules engines and a mix of supervised and unsupervised machine learning.

But these technologies become outdated, so you need solutions that can evolve. If solutions are not updated, engines and rules-based systems can become susceptible to false positives.

  1. AI for Application Fraud Detection

Financial institutions also use AI-based document verification tools for fraud detection. Some AI solutions use existing data sets to verify information provided by customers.

This offers more efficient and ultimately automated document fraud leading to fewer loan write-offs. Using AI for fraud detection is excellent for organizations that process dozens or even thousands of applications every day. This leads to a lower risk of fraud and improves user experience.

Conclusion – Fight Application Fraud

Digital transformation is an ongoing trend for modern businesses. Organizations are becoming quick to adopt new technologies to streamline operations, improve customer experiences, and boost competition.

But as businesses increasingly rely on interconnected devices, the risk of fraud is also increasing. Application fraud poses huge risks to businesses, which can lead to huge financial and reputation losses.

Businesses should rely on all available methods such as DIRO to prevent application fraud. DIRO document verification verifies documents from the issuing source to prevent the use of fake and stolen documents. This helps businesses improve the entire onboarding process and reduce user experience.


Protecting Yourself from Holiday Shopping Fraud

The holiday season is upon us, with Black Friday and Cyber Monday just around the corner. As the festive shopping rush begins, it’s important to stay vigilant against potential fraudsters who are gearing up to exploit the season’s hustle and bustle with different holiday shopping fraud.

Whether you’re a retailer hiring seasonal workers or a shopper making wish lists, staying informed about common scams can help you safeguard your financial security. 

Here are five prevalent scams that are expected to show up unexpectedly this holiday season.

5 Ways to Protect Against Shopping Scams?

There are some basic steps everyone can follow to prevent holiday shopping fraud. Without proper vigilance, it’s almost impossible to distinguish between legit sellers and scammers.

1. Vigilance Against Phishing Attacks

Phishing attacks are the biggest concern that intensify during the holiday season. At this time of year, fraudsters often deploy emails or text messages designed to lure recipients into sharing personal information or clicking malicious links.

These messages may appear to come from legitimate businesses and offer enticing rewards or promotions for minimal effort.

For instance, fraudsters may exploit the increase in package deliveries by sending fake tracking notifications or emails that claim there’s an issue with a shipped package. The end goal is to prompt recipients to enter sensitive information.

To defend against these scams, it’s crucial to exercise caution and critically evaluate suspicious offers. Ask yourself whether a legitimate organization would request payment details or personal information through such means. 

If in doubt, reach out directly to the business using verified contact information to confirm the legitimacy of the message.

2. P2P/Zelle Scams: Be Wary of Unsolicited Calls

Scams involving peer-to-peer (P2P) payment apps like Zelle are an ongoing concern. Use of these apps tends to spike during the holiday season. Fraudsters love to impersonate banks or credit card companies, making unsolicited phone calls to victims. 

They may claim there’s been fraudulent activity on the victim’s account and instruct them to transfer money to a purportedly secure account—owned by the fraudster.

In addition, fraudsters may manipulate consumers into making payments through P2P apps outside the legitimate shopping websites. 

For example, they might pose as sellers on popular marketplaces and entice buyers to make direct payments through P2P apps to evade fees or secure exclusive deals. 

To avoid falling victim to these schemes, stick to the official payment methods offered by trusted websites and never make direct payments to individuals.

3. Guarding Against Account Takeover

Account takeover scams, a time-honored tactic, continue to pose threats during the holiday season. In these scams, fraudsters gain access to victims’ accounts and exploit their credentials to make unauthorized transactions, often targeting e-commerce and retail accounts.

Be vigilant for notifications about unusual orders, shipping addresses, or other account changes. Amid the holiday rush, it’s easy to overlook such notifications, so be proactive in monitoring your accounts.

If you suspect any unauthorized activity, act promptly to secure your account and prevent further fraudulent actions.

4. Promotion Abuse: Don’t Fall for Too-Good-To-Be-True Offers

Holiday sales often tempt consumers with irresistible promotions. Scam artists capitalize on these offers, exploiting promotions that involve referrals, sign-ups, or Buy Now, Pay Later (BNPL) services.

They may open fraudulent accounts to cash in on these promotions or leverage bots to automate the process. Be cautious if you receive confirmation emails about new accounts you didn’t create.

While you might not directly suffer financial losses, the prospect of fraudsters using your personal information illicitly remains a concern.

5. Vigilance Against Fake Websites and Seller Accounts

Fraudsters deploy fake websites and social media accounts to impersonate legitimate businesses, thereby enticing users into divulging personal information or downloading malware. 

These fake websites are designed to closely mimic authentic ones, even appearing in search engine results and sponsored ads. Similarly, on e-commerce platforms like eBay, fraudsters create counterfeit seller accounts to trick consumers into paying for nonexistent items or services.

Exercise caution while clicking on links in emails or social media posts to mitigate these risks. Verify the legitimacy of websites before entering personal information. If a deal seems too good to be true, it’s wise to approach it skeptically.

Secure Your Shopping Experience

While the holiday season offers joy and celebration, it also presents an opportunity for fraudsters to exploit unsuspecting consumers.

To protect yourself, remain vigilant, and adopt a skeptical approach to unfamiliar offers or communications. Staying informed about prevalent scams and following best practices can ensure that your holiday shopping remains safe and secure.

Remember, your awareness and proactive response against frauds are powerful tools in thwarting fraudsters’ attempts and preserving the joyous spirit of the season.


1. What does “Holiday Shopping Fraud” refer to?

Holiday shopping fraud involves various deceptive activities that target shoppers during busy holiday seasons, aiming to steal personal and financial information, money, or merchandise.

2. Why is holiday shopping a prime time for fraud?

During holidays, people are often in a rush and more willing to make purchases online or in-store. This creates opportunities for fraudsters to exploit vulnerabilities in payment systems, websites, and customer behavior.

3. What are the common types of holiday shopping fraud?

Common types include phishing emails, fake websites, identity theft, counterfeit products, gift card scams, and online auction fraud, where buyers pay but don’t receive items.

4. How do gift card scams work?

Scammers might request payment via gift cards for various reasons (e.g., fake tech support, overdue bills). Once the gift card codes are given to scammers, they can’t be traced or refunded.

5. What should I do if I suspect a phishing attempt?

Don’t engage with the message. Report it to your email provider and the relevant authorities. If it’s from a legitimate organization, contact them through official channels to verify the communication.


Protecting Against Authorized Push Payment (APP) Fraud

As online transactions continue to surge across industries, concerns over authorized push payment (APP) fraud are growing among businesses worldwide. During the first half of 2022, APP fraud constituted a staggering 75% of all digital banking fraud. This type of fraud poses serious risks to both businesses and their customers, leading to financial losses, reputational damage, and erosion of trust.

To counter the evolving tactics of fraudsters, businesses are actively seeking strategies to mitigate APP fraud risks and ensure the security of their customers’ financial information. This not only involves the implementation of robust security measures but also extends to educating customers about how to avoid falling victim to scams.

In this article, we will delve into the concept of APP fraud, explore various forms it can take, and provide insights into effective strategies that businesses and customers can employ to thwart fraudulent activities.

What is APP Fraud?

APP fraud involves scams in which criminals manipulate individuals or businesses into transferring funds to fraudulent accounts. Fraudsters employ diverse techniques to gain victims’ trust, often by masquerading as legitimate entities or individuals. 

Unlike other types of fraud, APP fraud entails victims willingly authorizing fund transfers, frequently through online banking or phone conversations. This makes recovery challenging and can result in substantial financial losses for victims.

As APP fraud continues to rise, financial institutions are implementing countermeasures. However, businesses and individuals must remain vigilant and adopt precautionary measures to safeguard themselves against these scams.

Examples of APP Fraud

APP fraud manifests in various ways, with fraudulent actors utilizing an array of tactics:

  • Impersonation Scams

Fraudsters pose as legitimate entities and request victims to transfer money to fake accounts. For instance, they may impersonate a bank employee and claim there’s an issue with the victim’s account, demanding a payment for resolution.

  • Invoice Fraud

Fraudulent actors send fabricated invoices to companies or individuals, requesting payment for nonexistent goods or services. Companies may receive invoices for services they never ordered, leading to payments to fraudulent accounts.

  • Investment Scams

Fraudsters promise high investment returns, persuading victims to transfer money to fictitious accounts. Examples include Ponzi schemes that promise lucrative returns on cryptocurrency investments.

  • Romance Scams

Fraudsters build relationships on online dating platforms and request funds to be transferred to fraudulent accounts. The notorious Nigerian prince scam is an example, where fraudsters impersonate wealthy individuals and request money for various reasons.

  • CEO Fraud

By posing as CEOs or high-ranking executives, fraudsters coerce victims to transfer funds to fake accounts. For instance, a scammer might impersonate a CEO and request an urgent payment to a supposed supplier.

  • Social Engineering

Social engineering uses psychological manipulation tactics. Fraudsters use impersonation techniques such as impersonation. They assume the identity of big companies to get them to surrender account information, and login details, or authorize payments.

  • Phishing

Phishing scams are prevalent. Fraudsters impersonate the identity of a trusted institution via email or text to get the victim to click on a link or download harmful files. Once the user opens the link/file, the fraudsters can access and collect their personal information.

  • ATO

ATO or Account Takeover Fraud is when a criminal takes control of an account that belongs to an individual or organization to cause harm or steal money. One of the most common methods is when a fraudster uses a hacked social media account to ask the victim’s friend to send money.

  • Confidence Scams

These scams work when a fraudster gains someone’s trust to access their account or manipulate them into handing over money. Usually, it involves a romantic angle or a business opportunity. 

  • Tech Support Scams

Fraudsters masquerade as tech support personnel, demanding payment to resolve fictitious computer issues. Victims receive pop-up messages prompting them to make payments to remove nonexistent viruses.

Protecting Customers Against APP Fraud

Businesses bear the responsibility of implementing effective security measures to safeguard customers against APP fraud. This involves educating customers about fraud risks, verifying payment requests, utilizing secure payment methods, monitoring accounts, implementing fraud prevention measures, and promptly reporting incidents to authorities.

Customers also play a pivotal role in protecting themselves against APP fraud:

  • Verify Requests: Customers should verify payment requests, especially those from unfamiliar sources. Authenticity should be confirmed before authorizing any transfer.
  • Use Secure Payment Methods: Secure payment methods requiring two-factor authentication, such as card payments or bank transfers, should be favored. Avoid cash or insecure money transfer services.
  • Beware of Phishing Scams: Customers should exercise caution regarding phishing scams, refraining from clicking links or downloading attachments in suspicious emails or texts.
  • Protect Personal Information: Strong passwords, two-factor authentication, and prudent sharing of personal and financial data are essential safeguards.
  • Keep Software Updated: Regular updates to software and devices help guard against malware and cyber threats.

Fraud Detection and Prevention Tools

Advanced tools like Stripe Radar and secure payment hardware, such as Stripe Terminal, empower businesses to prevent APP fraud by offering:

  • Real-time Transaction Monitoring: Stripe Radar monitors transactions in real-time to detect anomalies and high-risk activities, enabling swift intervention.
  • Behavioral Analytics: Behavioral patterns are analyzed to identify unusual activities and potential fraudulent actors.
  • Two-factor Authentication: Secure payment hardware ensures dual authentication before transactions are authorized.
  • Data Encryption: Payment hardware and software use encryption to protect sensitive customer information.
  • AI-based Fraud Detection: Machine learning and AI algorithms detect patterns and anomalies to identify potential fraud.

Role of Liability Sharing in APP Push Fraud

The UK Payment Systems Regulator (PSR) made the news when they announced the 50/50 liability proposal and published their APP Fraud Performance Report. While the UK made the news the most, the proposal is not just limited to the UK and we’re seeing several countries across other regions. Several regions taking regulatory steps to fight scams that are enabled by real-time payments.

Several countries are taking steps to implement data sharing among one another to prevent fraud. The UK has taken the highest steps compared to other regions with the 50/50 Liability Announcement. It’s only a matter of time before other countries start implementing similar regulations. This is already apparent with the Monetary Authority of Singapore’s proposed framework for liability sharing.

Pros and Cons of Liability Sharing

Uncover more mule accountsReputational damage & customer switching.
Reduce scam lossesIncrease in opportunistic and first-party fraud.
Better customer protectionMore financial exclusion

With better data sharing among several regions, financial institutions (FIs) can make more accurate decisions to prevent fraudsters from opening a mule account.

Moreover, businesses will be able to judge better if a new customer account is part of a mule network. However, with the reporting comes potential risks. Above all, data sharing will lead to reputational damage to organizations that were hacked or attacked. Customers will better understand how well their financial institution protects them and how likely a particular institution is to be attacked.

Another benefit of sharing information between financial institutions and cross-industry collaboration is that it leads to a significant reduction in scam losses. 

The ability to highlight certain red flags on specific fraudulent transactions in real time can significantly reduce the risk of fraud. The enforced reimbursement of customers opens the door for first-party fraud. Account holders can claim that they were victims of a scam when they’re trying to scam the system. 

The focus of the regulation is to protect the victims of scams and more customers will be safeguarded. FIs will need to prove that the customer purposefully was a part of the scam to be reimbursed. 

Final Take

By fostering collaboration between businesses and customers and promoting awareness of emerging threats, APP fraud can be effectively curbed. As both parties unite to combat fraud, they enhance security measures and reduce vulnerability.