By Sara Coble
Increase in Smishing Scams
A new financial crime report by risk management tool developer Feedzai has found an increase in phishing scams. These scams are perpetrated via text message, a practice known as smashing.
The report analyzed over 1.5 billion global transactions completed in the second quarter of 2021. It paints a picture of the state of financial crime, consumer spending habits, and the top fraud trends.
Purchase scams, where consumers pay for products or services that never arrive, topped the list of fraud scams. Following these were scams involving social engineering, impersonation, and account takeover (ATO).
Additionally, smishing involves scammers sending text messages to trick consumers into clicking on dangerous links and sharing personal information. Notably, for the very first time, smishing made it onto Feedzai’s top five list, ranking as the fifth most common fraud scam.
Shift to Cashless Transactions
Analysis of the data revealed a continuous shift towards cashless transactions. Specifically, there was a 146% increase in peer-to-peer (P2P) payments and a 44% decrease in cash transactions. Online transactions grew by 109% to nearly double the number of in-person or card-present transactions.
Financial criminals have exploited the shift, with the result being that the number of online card fraud attempts increased by 23% between April and July 2021.
“Cashless payments were already on the rise, but the pandemic accelerated all forms of digital transactions when lockdowns hit,” said Jaime Ferreira, senior director of global data science at Feedzai.
Adapting to Digital Payments
“Millions more people experienced just how convenient digital payments and banking are when they couldn’t go to a bank branch or a restaurant or grocery store.”
Ferreira warned that the convenience of cashless transactions comes with a cost.
“Cashless transactions are not the future anymore, they are today,” he said. “Financial institutions and retailers need to address the financial risk and higher complexity attacks that arise with the digital evolution.”
Researchers analyzed fraud rates across U.S. cities to identify those with the highest increases over the past year. Las Vegas topped the list with a 411% increase, followed by New York at 396% and Charleston, South Carolina, at 251%