This was the focus of our recent webinar, From intuition to intelligence – fraud trends to know for 2023. Hosted by Fintech Futures, the event featured a team of three risk management experts: Imogen Hammond-Williams, digital identity account executive at Veriff, Patrick Moreau, data scientist at Inscribe, and Christian Townsend, director, anti-financial crimes and AML compliance at Mercari.
In this post we share 11 of the standout stats these experts shared and how they’re shaping the risk management landscape in 2023 and beyond.
1. Fraud is up 18% year on year (Y-o-Y) globally.
If your organization has seen an uptick in fraud over the past year, perhaps you can take small comfort in the fact that you are not alone. Data from the 2023 Veriff Identity Fraud Report revealed a substantial 18% YOY increase in all fraudulent activity from 2021 to 2022.
2. Recurring fraud increased 46% YOY.
According to Veriff, the most significant growth has been in recurring fraud — which is when criminals who have been successful with a certain technique try to trick the system again using the same methods. These tried-and-true tactics are not only repeated by the same cybercriminals, but sometimes shared within their network, which means that the risk of recurring fraud is likely to continue to grow as more people catch wind of a successful MO.
P.S. The second most significant growth area? Document fraud. (But we’ll get to that).
3. More than half (51%) of all financial services fraud were categorized as identity fraud.
According to Veriff’s Identity Fraud Report, half of the cases of fraudulent documents involved changes to the name and address on the file — meaning the identity of the applicant and the true owner of the document do not match.
Data from Inscribe’s newly released 2023 Document Fraud Report supports this analysis: 46% of the fraudulent documents we detect include altered identity details, as well as alterations to financial content within the document, such as income, bank balance, transaction amounts, transaction descriptions, etc.
4. Nearly 1 in 10 cases of all fraud leveraged identity farming.
Data from Veriff reveals that 9% of all fraud is made up of identity farming, which the company defines as a type of online fraud in which fraudsters create numerous accounts on a large scale to engage in various forms of fraud. This underscores the need for risk professionals and risk management teams to develop and implement hurdles within the customer onboarding process to deter these users and prevent them from carrying out their plans.
One thing all our panelists seemed to agree on is that document fraud is on the rise. Data from the 2023 Veriff Identity Fraud Report showed a 31% increase in document fraud globally.
5. Financial services companies saw a 79% increase in document fraud in 2022.
In times of economic instability, fraud rates tend to rise. Inscribe’s 2023 Document Fraud Report shows a massive increase in fake documents and the use of document templates in particular.
6. Document fraud is also a huge area of concern for lenders.
In a survey of more than 400 lending professionals conducted by fintech Plaid, six in ten organizations (61%) experienced document fraud, making it the most common type of fraud reported.
7. Half of all fraudulent documents show signs of first-party fraud.
42% of fraudulent documents include alterations to only financial details like bank balances, transaction amounts, and other financial information, but no alterations to identity details (a signal of first-party fraud that could result in credit losses). Inscribe data shows that 50% of fraudulent SMB loan applications have signs of first-party fraud and over 30% of fraudulent personal loan applications have signs of first-party fraud.
8. 3X growth in document templates detected in 2022.
As document templates become easier than ever to acquire online, use of counterfeit, fake, or forged documents that are purchased online has soared. Inscribe recorded a three-fold YOY increase in the number of distinct document templates submitted to the platform for review. During one week in 2022, Inscribe tools detected nearly 100 different templates being used by multiple customers. As fraudsters openly share successful techniques, as well as the document templates, we’re likely to continue to see an increase in “fraud-as-a-service.”
9. The highest document fraud rates are found in common documents from well-known institutions.
When it comes to fraud, cybercriminals aren’t thinking small — at least not when it comes to falsifying documents. While many analysts expected the highest rates of fraud to be from small, regional banks or unfamiliar institutions, analysis from the Inscribe 2023 Document Fraud Report found that the highest rates of fraud were found in some of the most common documents and well-known organizations. Topping the list were tax forms (W-2s and CP-575s) and bank statements from Bank of America, Wells Fargo, and TD Bank. Even though these statements or documents may look familiar, risk analysts should be aware that they are the most commonly falsified.
10. Fraud within crypto businesses has grown 25% YOY between 2021 and 2022.
As crypto becomes more mainstream and regulations remain relatively lax, fraudsters are keying in on a new target. Veriff data shows that about one in ten verifications (9.6%) completed on behalf of a crypto business has been fraudulent.
11. Documents + crypto = double trouble.
The fastest growing type of fraud within the crypto category is document fraud, with this category increasing a staggering 81.7% YOY, according to Veriff.
Knowing what risks exist in the present landscape is the first step towards protecting your business and your customers from fraud. But what comes next?
As the risk landscape becomes broader and more complex by the day, it’s increasingly important for companies to engage risk management experts like those in our webinar to prepare their business to face this unfortunate reality.
To learn what additional actions your company can take to protect itself from the leading fraud risks of 2023 and safeguard against future developments, please listen to a recast of our recent webinar here or download a copy of our 2023 Document Fraud Report.
Want to learn how Inscribe can help you mitigate the risks of fraud and credit loss? Reach out to speak with an expert from our team.