FinTechCyber Security & FraudFraudsters target COVID-19 vulnerabilities

Fraudsters target COVID-19 vulnerabilities

Companies were already seeing a rise in fraudulent behaviour before coronavirus, now it has led to a rise in activity

As the economic fallout of COVID-19 continues, fraudsters are taking advantage of uncertainty and instability that has become pervasive across industries.

“The current COVID-19 pandemic is having significant effects as fraudsters at all levels are taking advantage of the current uncertainty,” says James Richardson, head of market development, risk and fraud at Bottomline Technologies.

“We are seeing a notable increase in fake WHO and CDC alerts directed towards those working in payments processing, treasury departments and payroll, while email malware campaigns are hitting finance departments across the globe. Fraudsters are clearly changing their tactics and playing on human emotion by encouraging people to disclose financial information in order to preserve the safety of themselves and their loved ones. Increased levels of anxiety among everyone at this time means that businesses of all sizes are becoming much more susceptible to fraud”.

Even before COVID-19, fraud was already a major issue for many companies. In a survey conducted by Bottomline Technologies, more than half (53 percent) of companies reported experiencing fraud in the last 12 months. 76 percent said the threat of fraud has increased over the past year.

For Richardson, the human element of treasury remains the most vulnerable. “A classic example is a business email compromise where someone, a fraudster would attempt to convince an employee that they are the employee’s boss.

“The tactics used in this are far more sophisticated than they’ve ever been. They are leveraging the likes of LinkedIn and Facebook to identify the organisational structure that you work in. Then they identify who is the CFO, who’s involved in making payments, and when they are on a holiday. At a society level, we’re being far more open with information and that is delicious to the fraudsters. They’ve got a far more transparent view of an organisation and then can start looking for gaps.

The report found the most successful fraud attempts were some of the oldest types of fraud. Bank mandate fraud is the most successful at 33 percent, cheque and wire fraud are at 25 percent and 23.5 percent respectively.

Automation addressing fraud

According to Sadiq Javery, payment and treasury expert at Kyriba, fraud shouldn’t be seen as an isolated problem but viewed more holistically. “You need to look at fraud strategically. Fraud is occurring because there is really antiquated stuff going on.

“It’s happening because we don’t have automated controls in place. We don’t have automated controls in place because we’ve previously been hesitant about putting those in and affecting BAU, things that need to happen the next day. Changing and running the business at the same time is very hard”.

As more businesses and treasury department move to working from home, Richardson says more vigilance and security measures will be needed. “With many treasury departments now working at home, it’s essential that company security is leveraged, such as VPNs and compliance with the corporate protocol. The risks of insider fraud sadly go up in this scenario.

“The most important thing firms can do is to remain diligent and take steps to remind both customers and staff not to be pressured into releasing any payment information, or payments. The education on fraud in the last few years is more important to heed now more than ever. We are all responsible for payments, and responsible for protecting them.”

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