Three Anti-Fraud Trends to Watch in 2024: AI Adoption, Improving CX and Throwback Threats

In a 2009 ACFE report on the 2008 financial crisis, about half (49%) of 500 fraud experts surveyed cited increased financial pressure as the foremost factor driving the year’s fraud surge. It is a testament to what fraud examiners have long understood: fraud never goes away but changes with the times – and tough times, unfortunately, often foster motivation and ripe conditions for fraud.

As 2023 winds down, inflation hovers above the Fed’s ideal for a soft landing. It’s not hard to imagine how a tepid economic outlook and curtailed consumer spending could set the stage for another record year for scammers. What might that signal for the year ahead? Anti-fraud professionals can anticipate advocating for increased tech adoption as they confront cons they thought they’d said goodbye to long ago. But with the right approach, they could find themselves boosting customer loyalty in the process.

From adoption to acceleration: AI and analytics in the fast lane

The potential for a fraught fiscal year highlights the need for anti-fraud professionals to have the right data and the right technology at the right time to protect the enterprise and the customer. Fraudsters meet us at every turn with increasingly advanced use of technology — especially as generative AI use burst into the burst onto the scene in 2022, equipping the everyman crook with new tools for polishing phishing ploys and spreading malware. 

To improve the risk posture, banks will spend more time fueling decision engines and analysts with layered, multi-source, real-time data, expertly orchestrated in 2024. Some financial institutions will modernize more holistically with a FRAML approach that leverages their tech investments across fraud detection and anti-money laundering (AML). Routine investment in the best technologies to detect and prevent fraud and other financial crimes is no longer a “nice to have” but a matter of necessity. 

In 2024, acceleration will continue. Machine learning algorithms, artificial intelligence, visual investigations, visual analytics, data orchestration and other advanced software that can analyze enormous amounts of data and identify suspicious events and transactions have been on the anti-fraud and compliance pros’ radar for some time. Various organizations are in various stages of adoption, but generally, all financial firms need to accelerate, then consolidate data onto a single, robust, cloud-native platform. It’s the future, and the future is now.

Fraud-as-a-service inflames the industrialization of fraud 

Cream-of-the-crop tech to prevent the new age of fraudsters: it sounds ideal, doesn’t it? Anti-fraud professionals have worked tirelessly for the last decade to build up defenses to real-time payments fraud and digital fraud methods. Especially post-pandemic, safeguards against older and person-to-person, physical fraud types were neglected in pursuit of airtight digital defenses.  

This has prompted an alarming trend. Fraudsters are reverting to old forms of fraud and enhancing them with recent technology. Think check and deposit fraud and even holding up mail carriers to break into boxes, steal credit cards and look for personally identifiable information (PII). 

In this startling scheme, crooks will hold up mail carriers, who are unarmed, for “the arrow key” that allows access to blue USPS boxes and apartment complex’s mailboxes. After raiding for paper checks or other items with PII, they will sell it to another group of fraudsters on the dark web. The party that purchases this PII can use it to rig account takeovers, engage in synthetic identity fraud and even “wash” checks and put in new amounts of money before depositing them into mule accounts to move money around.

ChatGPT can also be incorporated to accelerate criminal activity. For instance, a breach at a large retailer will render millions of card numbers to fraudsters. They can sell by card type in bulk on the dark web, often segmenting by premium cards, classic cards, platinum cards and more. The party that purchases these card numbers can then use ChatGPT to create automated routines to test and mount card-not-present attacks in a matter of moments, over and over, at breathtaking speed.

The key to understanding fraud-as-a-service is the division of labor and the various players involved. As separate groups buy, sell and leverage PII, it turns fraud into a true industry, and one that fraudsters can operate within much more quickly and easily than anti-fraud professionals can chase. Thwarting industrialized fraud will top anti-fraud pro priority lists in the coming year.

In 2024, anti-fraud safeguards enhance the customer experience

It’s no secret that rapid migration into the virtual realm changed customer expectations of their providers forever. Turbo driving into digital experiences left anti-fraud professionals scrambling to keep up with polished perpetrators exploiting the new normal. 

Now, post-pandemic consumers expect an integrated customer experience (CX) across digital channels. Professional fraud fighters have long feared that sufficient fraud checks and smooth CX are at odds. Surely the friction of fraud alert notifications and transactions delayed for authentication irritate consumers, and potentially even drive them to competitors. 

New research reveals that this is not the case. A recent consumer fraud study by SAS showed that, among 13,500 adults surveyed in 16 countries, three-quarters said they would agree to more delays and checks in transactions for better fraud protection. 80% are willing to use biometric methods like facial or voice recognition for payments and transactions. In fact, more than half (57%) prefer to authenticate with biometrics versus recalling fixed passwords. 

The study also revealed that seven in 10 consumers are, in fact, willing to share more personal data — such as their location and their behavior — with their service providers, so long as it’s used to shore up anti-fraud measures. 

This couldn’t be better news for anti-fraud professionals. Consumers want to know that top-of-the-line tech is being employed to protect their assets. With their customers as willing partners, banks, insurers, retailers, telcos and other businesses can lean into investing in new-gen fraud protection. Crucially, financial institutions must have the infrastructure in place to incorporate these reams of data and be ready to coordinate vendors to facilitate better, faster decisioning.

Eyes on the prize in 2024

In 2024, anti-fraud and risk professionals will continue to juggle multiple goals as fraud threats mount in the wake of financial turmoil. Maintaining customer safety and trust will be paramount as we balance business growth, solid risk and compliance, and reducing loss while optimizing the customer experience. With new tools and legacy knowledge at hand to confront threats, fraud professionals can take protecting the bank and the brand to new heights in the new year.