The State of Fraud Detection & Prevention in 2024 | Ready, Set, Fraud

Since the dawn of the internet in the 90s, we’ve witnessed multiple phases of digital revolution. The Covid-19 pandemic also served as a huge catalyst in propelling businesses into a digitally-driven world which continues to evolve. While this has elevated the experience of consumers and businesses, this has also given way to more advanced technology that continues to fuel increasing fraud rates – so as your business’s technological capabilities have grown, so have the tools and capabilities for fraudsters.

2023 was an explosive year for the fraud landscape, we witnessed common forms of fraud increase while being accompanied with the emergence of new fraud techniques, such as those powered by generative AI.

Decoding the 2023 Fraud Landscape | Analyzing Shufti’s Millions of Verifications

The sophistication and intricacy of fraudulent activities perpetrated by malicious actors continued to burgeon throughout 2023. Unfortunately, fraud shows no signs of decelerating as we continue to progress further into 2024. While many forms of familiar fraud were also experienced in preceding years, there are some notable developments that require immediate attention from organizations, affecting both identity verification [IDV] and anti-money laundering [AML] processes. These factors will force organizations operating across all industries to combat existing threats in tandem with the emergence of new fraud trends.

Drawing insights from our comprehensive analysis, which thwarted over 1.3 million fraudulent verification attempts in 2023, a few pertinent observations surfaced:

• 2024 forecasts indicate a surge in fraud across most sectors, with a heavy target anticipated on crowdfunding and investment platforms, alongside payment and exchange sectors.
• Re-emergence of perennial adversaries is imminent in 2024. Businesses will be required to face persistent challenges associated with common attacks, such as phishing attempts, impersonations, and chargeback fraud.

The rapid advancement of fraud technologies, from generative AI ( such as deepfakes) to synthetic identities, poses complex security challenges. This has necessitated a recalibration of IDV strategies and solutions to counteract such evolving threats efficiently.

Looking to 2024 and coming years, several technological facets require attention:

Digitization and Anonymity

In an interconnected digital landscape, criminals often feel they can operate with virtual impunity and are exempt from legal ramifications due to a complete lack of physical traces and geographical limitations.

AI & Machine Learning

The fusion of artificial intelligence (AI) and machine learning (ML) has served to amplify the realism of deepfakes, counterfeit documents, and synthetic identities. This has essentially undermined conventional detection mechanisms, enabling fraudsters to successfully navigate and bypass outdated IDV solutions.

Generative AI

Leveraging its augmentative capabilities, enables fraudsters to orchestrate sophisticated identity fraud schemes – fabricating identities from scratch as opposed to merely tampering and editing stolen or counterfeit documents.

These factors merely represent the surface of multifaceted challenges that confront fraud prevention professionals across all industries. Businesses are being compelled to take on a pre-emptive and adaptive approach to successfully safeguard consumers and customers from constantly developing fraud threats.

This narrative serves as part one of Shufti’s three-part blog series, where we’ll dive deeper into recent industry trends, upcoming challenges, and imperative measures to fortify organizations against fraud. Join us in our upcoming discussion as we unravel further layers of the 2023 fraud paradigm.