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Welcome to News & Events

Published on December 20, 2011, by in Industry News.

Welcome to The Fraud Practice’s FraudBlog; your source for updates on current events, commentary and best practices related to the eCommerce CNP payments and fraud industry.

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State Unemployment Systems Battered With Breaches and Identity Fraud

Published on May 18, 2020, by in Data Breach.

The state of Arkansas shut down their unemployment application website which exposed the PII of nearly 30,000 applicants and Illinois faced a similar issue. Meanwhile, the U.S. Secret Service reports that hundreds of mules are being used to funnel unemployment benefits to an organized fraud ring in Nigeria falsely filing for benefits with stolen identity information.

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Best Practices for Achieving Success with Custom Modeling and Machine Learning

One of the most common reasons organizations fail to realize significant improvements in risk management after implementing custom modeling solutions can be described with one phrase: Junk in. Junk out. This article discusses best practices as it relates to data management and other factors that are shown to improve performance when it comes to custom modeling and machine learning or artificial intelligence.

It’s not just breadth of data, but also quality of data, that is important. One of the biggest misconceptions about machine learning (ML) and artificial intelligence (AI) is that you can just flip a switch and let the technology work its magic.

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The Role of Custom Modeling in Lending, Card Issuance and Insurance

Fraudulent insurance claims are responsible for more than $80 billion in losses per year in the United States, leading to higher premiums for all policy holders. It is estimated that card issuers will lose $1.3 billion this year from cards issued to synthetic identities. Total fraud losses from synthetic identities receiving loans and credit cards are estimated at $6 billion annually. Lenders, issuers and insurance carriers are increasingly combating fraudulent applications and claims with custom modeling solutions and AI.

Checking pay stubs to verify income is no longer sufficient. Completing an application with their authentic identity, a consumer can easily fabricate paycheck stubs or purchase them online for less than ten dollars. When fraudsters create synthetic identities to take out an uncollateralized loan with no intention of paying it back, they can just easily create or buy fake pay stubs to corroborate their synthesized existence.

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Custom Modeling for Risk Management Requires Human Element, Not Just AI

While there is value in leveraging Artificial Intelligence for modeling and analytics to detect cyber threats and fraud, security professionals are still more likely to indicate that a human touch is more valuable. A recent survey found that half of organizations are making use AI or machine learning but 60 percent put more trust in findings verified by humans. Meanwhile, changing consumer patterns and the rush to work from home in response to the pandemic has likely led to higher rates of false positives.

This isn’t to say AI and ML are not important – they are. In the same survey, 65% said these tools allow them to focus more on preventing cyber attacks than before and 40% reported feeling less stress.

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Avoid Preventable Chargebacks During the COVID-19 Crisis

While fraudsters are leveraging the pandemic crisis to commit more fraud, the increase in volumes, shipping delays and struggle to manage certain inventory is creating a unique set of problems. If not managed properly, merchants will see an increase in preventable, non-fraud related chargebacks and disputes. Here’s what merchants can do:

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Processing Through Acquirers with Lower Fraud Rates Reduces the Need for SCA Under PSD2

Many merchants both within and outside of Europe are concerned with meeting Strong Consumer Authentication (SCA) requirements and how this might impact sales when nearly every eCommerce order over €30 will require two-factor authentication. A lesser known fact is that this order value threshold for requiring SCA increases in multiple tiers based on the fraud rates of both the acquiring and card issuing banks facilitating the transaction, suddenly making the fraud rates of a merchant’s European processors much more important.

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How to Secure Your Video Chats and Meetings to Protect Against “Zoombombing”

Keeping unwanted parties out of business meetings can range from important to imperative depending on the topics and focus of the video call. There has been a sudden increase in employees working from home and requiring the use of Zoom or other services. While many media reports have discussed the threat of “Zoombombing,” there are several measures video chat users can take to greatly reduce these occurrences and their impacts.

Here are steps anyone can take to reduce the likelihood of falling victim to e-meeting eavesdropping in Zoom.

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Will Enforcement of SCA in Europe be Pushed Back Again?

Published on April 7, 2020, by in Payments.

The UK’s Financial Conduct Authority (FCA) recently suggested that milestones related to ensuring Strong Consumer Authentication (SCA) compliance by March 31, 2021 may need to be postponed due to the COVID-19 pandemic. The European Banking Authority (EBA) has maintained their December 31, 2020 deadline but will continue to monitor the events and reassess.

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Nearly Nine-in-Ten Organizations Experienced Spear Phishing Attacks While Over Half Fell Victim in 2019

According to a survey of over 600 IT security professionals across seven countries, 88 percent of organizations saw spear phishing attacks, 55 percent fell victim to at least one phishing attack, 86 percent experienced business email compromise attacks and nearly two-thirds experienced a ransomware attack.

The burgeoning issue and financial fallout from spear phishing is evidenced by the sheer number of organizations that experience and fall victim to such attacks. In their 6th annual State of the Phish report, cybersecurity firm ProofPoint surveyed IT security professionals across the US, UK, Germany, France, Spain, Japan and Australia. This survey along with surveys of over 3,500 adults across the same seven countries plus the results of over 50 million simulated phishing emails provided eye-opening results in this multifaceted study. Here’s a quick overview of some of these survey results highlighted in ProofPoint’s State of the Phish 2020 report:

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