June 25, 2024

Last year, U.S. customers and businesses witnessed a historic loss of $12.5 billion to online fraudsters, showing a 22% upsurge in cybercrime since 2022, as revealed by the FBI.

Even with these losses, the recently published yearly internet crime report by the FBI implies that Americans are becoming more aware. The bureau also reported an all-time high amount of online crime complaints last year—880,000—an increase close to 10%.

However, the bureau advises some skepticism since the majority of online scams are not reported.

The numbers reported are striking. Online investment frauds, causing Americans to lose $4.57 billion last year, lead the FBI’s list of 2023 cybercrimes, displaying a 38% rise over the $3.31 billion loss in 2022. Second on the list—costing $2.9 billion—are fraudulent business emails involving con artists manipulating authentic business accounts to deceive consumers into giving away money and sensitive details. Tech support scams, though falling third, experienced a 15% rise, making them the third most expensive scam of the year, amounting to nearly $1 billion. Losses due to ransomware surged 74% in 2023, costing Americans close to $60 million.

In light of such tremendous losses, it is hardly surprising that online businesses have expressed to PYMNTS Intelligence about intensifying their protective measures. Ninety-five percent of the 300 fraud-prevention executives recently questioned informed that they have either expanded their anti-fraud security systems or are planning to soon.

These executives, hailing from diverse U.S. companies with international sales, participated in a survey for “Fraud Management in Online Transactions,” a new report developed in partnership with Nuvei that outlines the fraud patterns businesses are witnessing and the measures they are implementing to minimize losses and maintain client relationships.

PYMNTS Intelligence found that 82% of e-commerce businesses faced cyber or data infringements in the past year. Forty-seven percent state that the breaches led to both revenue and customer losses. As considerable breaches can inflict reputational damage, 68% of businesses also noticed a decline in customer satisfaction linked to a breach.

Consequently, it is expected that 41% of the respondents have already started modernizing their anti-fraud toolkits, with 54% intending to soon. PYMNTS Intelligence also found out that merchants mainly selling tangible items are more proactive, with 45% presently upgrading their anti-fraud abilities, while only 37% of digital service providers are taking similar actions. However, they will not linger for long: 48% of digital service providers expressed their aim to amplify their defensive skills within the year, whereas less than half of retailers have similar plans.

It appears that updating battle strategies is income-dependent. “Fraud Management in Online Transactions” found that 46% of companies generating an annual income of over $1 billion are currently improving their anti-fraud initiatives. On the other hand, companies generating between $100 million and $250 million in yearly earnings are falling behind, with only 31% proactively enhancing their anti-fraud defenses.

When questioned regarding future enhancements to their online fraud prevention measures, the responses imply a potential sense of urgency across all revenue categories. Forty-nine percent of companies earning $1 billion or above plan to fortify their security systems, while more than half of the companies generating between $250 million and $1 billion have the same intent. Additionally, 64% of companies earning between $100 million and $250 million—which are currently trailing—also intend to bolster their defenses soon, hinting they have taken note of the unparalleled fraud statistics of 2023 and anticipate greater risks in the future.

 

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