Increase in Payment Fraud Sector by 56% Revealed in AU10TIX Q3 Identity Fraud Report, Accompanied by Unusual Drop in Cryptocurrency Usage
In the rapidly evolving digital landscape, the payments sector has become a prime target for organized fraud groups. According to AU10TIX's Q3 2023 Global Identity Fraud Report, the payments sector accounted for 51% of all financial fraud attacks, marking a significant surge compared to previous quarters.
The report, based on millions of transactions processed across 249 countries from July to September 2023, reveals that North America had the highest volume of payment sector attacks among all regions studied. APAC followed closely as the second most targeted region. This alarming trend highlights the urgent need for robust legislative measures to safeguard consumers from fraudulent activities.
In response to these escalating risks, payment providers are being urged to elevate their Know Your Customer (KYC) practices. In the absence of stringent regulations, these enhanced defenses are crucial to fortify the industry against fraud.
The crypto industry, however, experienced an unusual 51% drop in fraud. This shift is attributed to the June introduction of the EU Market in Crypto-Assets (MiCA) regulation, which aims to protect investors and consumers by introducing a new regulatory framework. The MiCA regulation will take effect in 2024.
The report also sheds light on the focus of professional fraud rings, which have shifted from cryptocurrencies to the payments sector. Dan Yerushalmi, CEO of AU10TIX, stated that the actual fraud rate is likely three to 10 times higher than reported due to sophisticated attacks using AI, deep fakes, and other technology.
In the United States, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are key regulatory bodies responsible for enacting consumer protection measures in the payments sector, especially related to cryptocurrencies. In the Asia-Pacific region, particularly China, the People's Bank of China (PBOC) is the principal regulatory authority overseeing payment infrastructures and consumer protection within the digital currency area, delegating many responsibilities to tiered banking institutions.
Many organizations and regions are proactively adopting stricter KYC guidelines to align with the legislation. Gartner considers facial image capture a "must-have" for identity verification vendors, and while fraud involving selfie capture represented less than 5% of attacks across all regions, it remains a critical component in the fight against identity fraud.
AU10TIX remains committed to fostering a secure and resilient financial ecosystem and invites stakeholders to collaborate in this critical endeavour. The financial well-being and reputation of a business may be severely impacted by the rise of sophisticated identity fraud. Regulatory bodies in the United States and the Asia-Pacific region must proactively create legislation that bolsters consumer protection in the payments industry.
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