Risks Around Every Corner: Social Engineering as a Key Fraud Trend Heading Into a New Decade

Welcome to the January 2020 edition of our newsletter!  In this issue, we’ll examine one of the top fraud trends of 2019 and look ahead to what may be on the horizon for 2020.

Social Engineering: It’s All About Who You Think You Know

An increasingly interconnected and global society has created great opportunities for millions of businesses, from coffee growers in Costa Rica to flat panel television manufacturers in China and points in between.  Yet as barriers to entering new markets have receded, risks of falling victim to fraud have grown.  In 2019, the use of alternative payment systems outside of, or as a corollary to, traditional banking methods exploded, and with that boom came reports of large scale frauds targeting smaller providers and, more importantly, a user’s tendency to use such systems for social media transactions, such as private fundraisers or private party purchases of used or new goods.

As with any new frontier, the understanding of risks involved is limited when compared to systems in place for decades.    The added aspect of social engineering – including fraudsters posing as friends or family members of targets on social media, often claiming to be in distress and thus in need of quick cash – will make such fraud even more critical.  Given that such fraud can often be organized by large, often multinational networks, anti-money laundering efforts will increasingly converge with more traditional fraud investigations to ferret out coordination between perpetrators.  At particular risk are high net worth clients, whose social media exploits have also led to more traditional crime, such as tipping off criminals as to when they’ll be away by flaunting a skiing trip abroad.

If one trend is likely to persist through time, it’s that people will not exercise due care and caution in their daily activities in order to avoid falling victim to fraud.  As a result, while more people and businesses offer greater details and information about themselves, equal or greater amounts of vigilance are also required to make sure commerce can proceed with limited risks.