“We are not talking about hacking into computers. We are talking about attacks on consumers through social engineering, extortion, and confidence tricks”, Lead Analyst for Payments at GlobalData Sam Murrant said in a new GlobalData webinar.
At the same time, Murrant mentioned that 39% of fraud reported in 2022 was social-engineering based.
Fraud losses reached 0.04% of global card payment value in 2022, according to the “Trends in Payment Fraud” report, published on February 16.
In the UK, authorised push payment fraud losses reached £811m in 2022. That number is expected to grow at a CAGR of 20.5% between 2021 and 2026 since people increasingly choose to shop for their products online.
As a result, more fraudsters will turn to social engineering techniques to trick people into paying them money.
Social engineering became the most prevalent fraud technique for the first time in 2022, followed by the stealing of card details or physical cards.
Lead Analyst for Payments at GlobalData Sam Murrant says that the only way to combat online fraud is for companies to educate consumers about the risk of social engineering.
“We are not talking about hacking into computers. We are talking about attacks on consumers through social engineering, extortion, and confidence tricks”, Murrant says.
“Otherwise, it is incumbent on the provider to reimburse the consumer”, he adds.
According to GlobalData’s “Six Key Payments Trends for 2022” report, providers must develop fraud management tools that adapt to how hackers and fraudsters behave online.
One way to combat fraud is through machine learning or artificial intelligence. Companies can leverage ML/AI to better detect and prevent future fraud attempts. If financial services providers fail to adapt to the growing threat of social engineering, GlobalData warns that their revenues will fall.
Around 47% of the consumers surveyed by GlobalData worldwide will close the account they suffered fraud with. According to “Trends in Payment Fraud” report, 26% of fraud victims drop their existing financial services provider following an attack.
However, Murrant says that card payments remain profitable while fraud continues to be under control.
“This doesn’t mean the industry should rest on its laurels”, highlights the Lead Analyst for Payments.
Overall, GlobalData experts predict that card payment value will grow at a CAGR of 12.2% between 2021 and 2026. The total card fraud losses are expected to reach more than £16.67bn in 2026.