Fraud in the Time of Coronavirus
A period of disruption inevitably creates a period of opportunity. Unfortunately that’s also true of malicious actors seeking financial gain through fraud.
History is filled with examples of opportunistic law-breakers seeking financial profit during times of disruption. The black market alcohol sales of Prohibition America stand out as an example that’s lived long in popular memory.
Fraud was already an established threat to business revenue prior to the coronavirus COVID-19 pandemic. PwC’s Global Economic Crime and Fraud Survey 2020 interviewed more than 5,000 respondents across 99 markets, revealing an astonishing 47% of respondents had experienced fraud in the preceding 24 months. PwC predicts that figure will ‘significantly increase’ at a time of coronavirus. In the United Kingdom alone, coronavirus-related fraud reports were up by 400% in March. No business is immune from this treat.
The unprecedented disruption caused by COVID-19 has created a virtual goldrush for fraudsters. Businesses are transitioning to remote working, creating new distributed weaknesses across entire business networks. Individuals are operating in new environments, unlocking fresh vulnerabilities. Businesses are working under extreme pressure, often with reduced workforces.
Neural Technologies has a long history of working with partners to deliver artificial intelligence (AI) and machine learning (ML) solutions to prevent fraud and reduce revenue leakage. That functionality is increasingly vital for smart enterprise planning at a time when vulnerabilities, and fraud itself, are on the rise.
Understanding vulnerability to fraud
There are of course many types of fraud threatening enterprises today, from cyber crime threatening data security through to increasingly sophisticated iterations of wire fraud.
Tackling these challenges requires a comprehensive understanding and approach to fraud protection, recognizing the origins of threats, and how to protect against them.
More than four out of every ten (43%) cases of fraud over US$100mil identified in the PwC report represented instances of malicious insider action. This style of fidelity fraud has been shown to thrive at times of extreme economic hardship.
The rush to on-board new partners at a time when businesses operations are strained can also increase vulnerability to fraud. One in five (19%) of respondents indicated vendors and suppliers as the source of the most disruptive fraud events. Appropriate due diligence that analyses the security and respectability of key vendors should never be overlooked.
Data loss is another area of extreme concern. The average cost of a major data breach for corporations is US$3.92 million according to a recent report from IBM and the Ponemon Institute. The various types of cybercrime together contribute to a global industry with a reported value of US$1.5 trillion.
COVID-19 has also inspired a transition from traditional scams to more coronavirus-inspired targeting. SMS fraud indicating unlikely financial wins has transitioned to become an offer for a ‘miracle cure’. These can lead to breaches in private data such as bank details, or even ‘wangiri’ or premium rate call scams that trick users themselves into running up huge phone bills on premium numbers.
The added challenge of fraud is one of reputation management. It’s not just about protecting your business from revenue leakage, but assuring customers and partners that your organisation is working hard to prioritise protection and security in its operations.
Embracing fraud protection
Telecommunications is one industry at the harsh front of this crisis, facing a double-edged sword of challenge and expectation. On one hand these businesses are vital to the ‘new normal’ of coronavirus — fundamental to both business continuity and worthwhile virtual social interaction. Yet the pressure on networks also sees them more exposed than ever to potential opportunities for fraud.
Neural Technologies’ Optimus Revenue Protection Platform provides a market-leading solution to tackle the problems of telecommunication fraud. Traditional fraud prevention is reliant on trained experts analysing and operating complex systems, a function which is increasingly pressurised in the high volume, remote working environment. Optimus delivers an automated solution that operates with advanced AI/ML capabilities to identify and quickly respond to fraud, with in-built learning capabilities that enables it to adapt to the sophisticated methods of modern fraudsters.
The quicker fraud is detected, the greater the revenue protection afforded to your business. This is the cornerstone of the Optimus solution — preventing and detecting fraud in near-real-time to ensure maximum protection of your financial systems.
Neural Technologies’ fraud management solution leverages machine learning to compare enterprise data against historic data trends, quickly identifying abnormal or high-risk behaviour. That understanding adapts and learns to detect evolving fraud types as they emerge. This solution is built on decades of wire fraud and telecommunications fraud prevention experience, providing wide coverage protection that adapts to identify new threats.
Just a quarter of respondents in PwC’s 2020 survey embraced AI/ML solutions as a way to prevent transactional fraud. In what PwC reference as a ‘staggering statistic when you consider the magnitude of the fraud threat every organisation faces.’
In PwC’s recommendations for fraud protection it specifically highlights AI and advanced analytics as ‘these tools have a clear return on investment (ROI) and offer a relatively cost-effective opportunity to upgrade your defences when it’s most needed.’
At a time of extreme volatility, the risks of fraud are amplified. So too are the benefits of an effective fraud prevention solution. Investing in protection delivers a clear return on investment that protects both the finances, and the reputation, of your organisation.