Experian Warns About Synthetic Identities and COVID Scams in Future of Fraud Predictions

Experian has released a Future of Fraud Forecast that identifies five of the biggest threats that businesses should expect to face in 2021. Many of the key trends from 2020 are likely to carry over into the new year as digital acceleration continues in response to COVID-19.

The problem is that many people and organizations are still adjusting to the new digital reality. Consumers are unfamiliar with digital tools and remain vulnerable to social engineering attacks, while businesses do not have the resources to deal with the higher volume of activity.

Together, those two trends have led to a dramatic increase in fraud rates during the pandemic. The US Federal Trade Commission has received 275,000 complaints since last January, which correspond to more than $210 million in COVID-19 fraud losses.

So what can businesses do to lower those numbers? According to Experian, synthetic identity fraud is the fastest growing form of fraud due to the ready availability of personal information that has been exposed in data breaches, and that is likely to remain true into the new year. However, fraudsters are expected to step up their game in 2021. Experian called particular attention to the threat of “Frankenstein faces” that use AI to combine features from different people to create new faces that can be used to get past biometric facial recognition systems.

Fraudsters will also take advantage of the ongoing disruption caused by COVID-19. In some cases, they will use the promise of vaccines and test kits (and the public’s desire to receive them) to launch phishing attacks. In others, they will try to get their hands on stimulus and unemployment benefits should the government decide to distribute more relief.

Small businesses that fail to protect their customers are likely to experience heavy losses in 2021 as people lose patience with subpar fraud prevention systems. Finally, fraudsters will use techniques like script creation and credential stuffing to automate their attacks and achieve account takeovers at scale. Businesses will be vulnerable to such methods as long as they rely on usernames and passwords for security. 

“Fraud is complex and our predictions show that businesses and consumers need to be vigilant in 2021 as fraudsters become more sophisticated,” said Experian Decision Analytics CIO Kathleen Peters. “Experian is committed to helping businesses anticipate future fraud risks, protect consumers and adapt on the road to recovery ahead.”

Experian has partnered with BioCatch to provide fraud prevention services for the financial industry. Jumio also warned about the threat of credential stuffing in its own 2021 predictions.

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January 11, 2020 – by Eric Weiss