The Evolution of Fraud in the Digital Age

In the Beginning on a Boat

Fraud has always been a part of human societies the world over – ever since currency has existed, so too has the ability to con people out of it. Wherever there is a way to deceive or take a shortcut, humans have been capitalising on those opportunities. The first ever recorded instance of fraud dates back to 360 BCE where two Greek armorers, Xenothemis and Hegestratos, devised a plan to intentionally sink their ship in order to claim the insurance premium. Fraudsters may not be sinking ships in the 21st century, but as the exchange-based economy evolves, so do the forms of fraud that attempt to exploit it. Fraudsters are constantly working on their next targets and this is a fact that is never far from the mind of individuals and companies.

The Sea of Data Dumps

Due to the exponential growth and expansion of the Internet, the opportunities for cybercrimes have in turn grown and expanded. This is a daunting prospect for many companies, as a ‘typical’ business can expect to lose approximately 5% of its revenue each year because of fraudulent activity according to Association of Fraud Examiners. It is unnerving for individuals too and may even have some users reluctant to further participate in new technologies for fear of becoming the next victim. However, it is undeniable that the electronic and mobile commerce growth cannot be halted or slowed down.

Individuals cannot be blamed for this apprehension especially after the massive data dumps experienced in South Africa recently. The “Master Deeds” incident as reported by TimesLIVE in late 2017 exposed more than 30 million South African Identity numbers, names, ages, gender, ethnicity, home ownership, contact information and in some cases their estimated income, directorship and employer information. Earlier in the same year there was a hack of Ster-Kinekor’s website, which put more than 6 million accounts at risk, Business Day reported. Not to forget the Facebook/Cambridge Analytica data scandal which compromised 96,000 South African users. 2017 was a particularly bad year for South Africans, with nearly the entire population being exposed at one point or another, but the trend is continuing. This year another data leak occurred when close to a million people (934,000) who had registered to pay traffic fines online were exposed; information leaked included identity numbers‚ e-mail addresses‚ full names and passwords. These data dumps are of paramount importance as they make significant contributions to the number one cybercrime – identity theft.

Identity Theft

This is the latest and arguably most damaging step forward in the evolution of fraud as it has far reaching, even inconceivable consequences. Experts in the field believe that every two seconds someone’s identity is stolen. According to a 2017 Identity Fraud Study released by Javelin Strategy & Research, identity theft has cost victims over $107 billion in the U.S. over the past 6 years. The study also shows that more users are becoming victims to these crimes despite public awareness projects.

We have all read the stories of people’s identities being stolen and then used to create fake credit accounts where copious amounts of debt are raked up. Everything from houses, luxury vehicles and jewellery. Identity theft is often described as a “silent” crime, which means it can go undetected for months while victims have incredulous debt build up. Identity theft is not a new occurrence as any document, printed or electronic, that contains any personal information about you puts you at risk of identity theft. However, due to massive data dumps and the acceleration of e-commerce the access to your personal information is at an increased risk.

Identity theft is not simply the attack on individuals, it also affects businesses and corporations utilizing any sort of digital marketing strategy. This is because fraudsters are wreaking havoc on digital marketing through more ‘subtle’ online identity theft. These kinds of thefts result in fake clicks and views that can severely damage marketers’ budgets. There is a high demand for digital strategies that get endorsements from powerful influencers with a big following. So fraudsters have begun to capitalize on this demand by stealing real identities to create fake followers; a recent report shows between 9-15% of twitter users and about 10% of Facebook users are fake duplicated accounts. Fraudsters also use stolen online identities to attract targeted ads. By hijacking real online identities fraudsters save themselves a lot of time and energy because they already appear to be credible sources using the existing date. However, this leads to the introduction of fake data, which can dismantle months of data collected for digital marketing targeting and strategies. These are just some examples of the ever-evolving digital fraudster attempting to exploit current digital trends.

How to keep your head above water

You need a layered approach when thinking about your fraud prevention strategy. Here are a couple tips to help you stay ahead of fraud evolution.

  • Be cautious in the information you share online. Keep your birthday, addresses and any other personal information private.
  • Practice good ‘password hygiene’. This means that you need to have different passwords for all of your different accounts. Passwords should contain letters and numbers and should be random or obscure. You should also regularly change your passwords, specifically those used for online banking. You can use a password manager to help you keep track of these.
  • If you receive any emails from what appear to be official sources containing invoices or other appeal for payments or personal information, check the source once more and even go as far as having a real phone call with the bank, for example, to verify the authenticity of the email requests.
  • When connecting your devices to WiFi services, do not connect to any WiFi you are unsure about and even if you are sure, consider using a VPN to keep your information secure because you do not know who else is on the network.
  • If you do any sort of online shopping, make sure that you use two-factor authentication. Also disable the “remember passwords” feature on your browser.
  • You should consistently check your credit card statements for any suspicious activity. An alternative would be to sign up to Maris IT’s credit alert system that updates you on any applications that want to use your ID number.
  • Beyond everything, you need to be vigilant and constantly aware of new scams.

The Internet explosion has meant that we all live our lives in an entirely different way – from how we connect to communities, to how we do our banking or how we get the groceries, the world has changed. Just as these changes are occurring, there are fraudsters out there trying to evolve their scams to further exploit a growing system. In this rapidly growing and changing digital age you need a trusted partner to help you keep checks and balances or else you will become one of the millions of victims of the new digital fraud.

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