A new financial crime report by risk management tool developer Feedzai has found an increase in phishing scams perpetrated via text message, a practice known as smishing.
The report analyzed over 1.5 billion global transactions completed in the second quarter of 2021 to paint a picture of the state of financial crime, consumer spending habits, and the top fraud trends.
Purchase scams, where consumers pay for products or services that never arrive, topped the list of fraud scams, followed by scams involving social engineering, impersonation, and account takeover (ATO).
Smishing, where scammers send text messages to trick consumers into clicking on dangerous links and sharing personal information, made it onto Feedzai's top five list for the very first time as the fifth most common fraud scam.
Analysis of the data also revealed a continuous move to cashless transactions, with a 146% increase in peer-to-peer (P2P) payments and a 44% decrease in cash transactions. Online transactions grew by 109% to nearly double the number of in-person or card-present transactions.
Financial criminals have exploited the shift, with the result being that the number of online card fraud attempts increased by 23% between April and July 2021.
“Cashless payments were already on the rise, but the pandemic accelerated all forms of digital transactions when lockdowns hit,” said Jaime Ferreira, senior director of global data science at Feedzai.
“Millions more people experienced just how convenient digital payments and banking are when they couldn’t go to a bank branch or a restaurant or grocery store."
Ferreira warned that the convenience of cashless transactions comes with a cost.
"Cashless transactions are not the future anymore, they are today," he said. "Financial institutions and retailers need to address the financial risk and higher complexity attacks that arise with the digital evolution.”
Researchers analyzed the rate of fraud geographically in the United States to reveal the cities with the highest increase in fraud over the past year. Las Vegas, Nevada, which has seen a fraud increase of 411%, topped the list, with New York (up 396%) and Charleston, South Carolina (up 251%) in second and third place, respectively.