Emerging Fraud Trends in 2024

Technology has advanced leaps and bounds over the last few years, providing opportunities for lenders to streamline and grow their businesses and reach more customers. However, it can have a more sinister side as criminals find ways to leverage innovative technology to deploy more sophisticated fraud schemes. The impact of these fraud attacks can be staggering. In fact, the FTC recently reported that consumers lost more than $10 billion to fraud in 2023.


In order to combat growing threats, it’s crucial that lenders anticipate fraud trends and leverage data and analytics to identify and mitigate scams. Experian recently released five fraud predictions for 2024 to help businesses understand what they should expect this year and how to best prepare.


Generative AI accelerates DIY fraud

Generative AI has exploded in popularity in recent years, bringing many benefits to businesses and consumers. Fraudsters are also exploring what they can do with it. Experian predicts they will use generative AI to accelerate “do-it-yourself” fraud with a wide range of deepfake content, such as emails, voice and video as well as code creation to set up scam websites and perpetuate online attacks. Fraudsters will also use generative AI to socially engineer “proof of life” schemes using stolen identities to create fake identities on social media. They can then interact online with these new profiles as if they are real people, making it difficult to investigate fraud because the profile seems legitimate.


Branches are cool again

While consumers have largely turned to digital lending and banking experiences in recent years, many are heading in-person to bank branches for security and peace of mind. While in-person banking may seem less risky, human error or oversight can still happen. Lenders need the ability to accurately verify customer identities at the branch and leveraging the right tools to do so is essential. Experian predicts lenders will implement more digital identity verification steps, like physical biometrics, at branches for in-person account openings to protect legitimate customers and mitigate losses.


Retailers hit with empty returns

The popularity of online shopping has driven fraudsters to find creative ways to scam some retailers and small businesses. The customers say they’re returning their purchased item but when the business receives the box, it’s empty. The customers then say they returned the product and it must have gotten lost in the mail. Experian predicts more criminals will use this method to keep merchandise in 2024, leaving businesses with lost goods and revenue.


Synthetic identity fraud will surge

During the pandemic, many fraudsters created synthetic identities but then quickly found easier methods to steal funds through various aid programs. These abandoned, dormant synthetic identities now have a few years of history. Experian predicts this will make it easier to elude detection — leading to fraudsters using these dormant accounts to “bust out” and steal funds over the next year. Businesses will need to collaborate more closely with their fraud-prevention partners to review their current portfolios for synthetic identity accounts.


Fraudsters expand into cause-related and investment deception

Criminals are employing new methods that strike an emotional response from people with cause-related asks or too-good-to-be-real offers to gain access to consumers’ personal information. These schemes range from fake GoFundMe campaigns and social media giveaways to investment opportunities and text fraud. Experian predicts these deceptive cause-related methods will increase in 2024 and beyond.


How lenders can fight fraud

When it comes to fraud prevention and protection, the process begins at account opening. Ensuring a multilayered, data-driven fraud strategy is in place is table stakes for lenders. Data and advanced analytics can help provide valuable insight so lenders can identify and mitigate multiple types of fraud and keep themselves and their customers safe.


Additionally, lenders should leverage innovative technology like biometric verification and machine learning to streamline their fraud management approach. Whether a customer is coming into a branch or processing an application online, lenders need the right physical and behavioral biometrics in place to add that extra layer to ensure a customer is legitimate. Machine learning can also identify fraud quickly and minimize customer friction while also constantly learning from previous transactions and new fraud patterns to become smarter and faster over time.


Finally, lenders should educate customers on what scams exist and how they can protect themselves. An Experian report found that more than 85% of consumers expect businesses to respond to their identity and fraud concerns, and doing so through valuable resources and advice can build trust and confidence with consumers.


As fraud continues to evolve and become more sophisticated, lenders need to stay one step ahead of criminals. Implementing the right fraud solutions and leveraging the latest technology, data and advanced analytics will help lenders protect themselves and their customers from existing and future fraud schemes.


About the Author

Kathleen Peters, chief innovation officer, leads innovation and business strategy for Experian’s Decision Analytics in North America. 

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