Fraud Awareness Week 2024: Emerging Threats and Proactive Strategies for Strengthening Fraud Defenses

International Fraud Awareness Week, held every November, raises global fraud prevention awareness and promotes proactive defenses. The Association of Certified Fraud Examiners (ACFE) leads this initiative, uniting organizations and individuals worldwide in the fight against fraud. This article highlights top financial fraud threats and stresses the need for robust prevention strategies.

Rising Threats in Identity Theft and Credit Card Fraud

The 2024 Identity Theft and Credit Card Fraud Statistics Report reveals a rise in identity theft cases, with 552,000 incidents reported so far this year, approaching last year’s 1,037,000 total. Credit card fraud remains the leading type, with 215,000 cases marking a 6% increase. Individuals aged 30-39 face the highest risk, and trends vary significantly across states. Financial losses reached $23 billion in 2023, up from $20 billion in 2022, underscoring the need for stronger fraud prevention practices.

Check Fraud: A Persistent and Growing Challenge

The H1 2024 Check Fraud Report from Recorded Future reports a 90% surge in check fraud-related Suspicious Activity Reports (SARs) since 2021. Financial losses reached $21 billion in 2023 as fraudsters accessed stolen check images on platforms like Telegram, where they are reposted and sold. While urban centers like New York City see the highest concentration of cases, rural areas are also affected. Financial institutions should educate customers, use stolen check data to strengthen fraud detection, and partner with law enforcement to address this issue.

Cryptocurrency Fraud: Escalating Losses in a Digital Frontier

The FBI’s 2023 Cryptocurrency Fraud Report underscores cryptocurrency’s expanding role in financial fraud. Crypto-related scams made up 50% of total fraud losses in 2023, totaling $5.6 billion, though they accounted for only 10% of fraud complaints. Investment scams dominate crypto fraud, representing 71% of crypto-related losses. A tenfold rise in Bitcoin ATM scams from 2020 to 2023 highlights the need for consumer education on crypto transaction risks, as fraudsters exploit these ATMs for cash conversions that complicate asset recovery.

Elder Fraud: Protecting Vulnerable Populations

Fraud targeting “older people” is on the rise. The 2023 Elder Fraud Report shows a 14% increase in cases involving people aged 60 and older, with over $3.4 billion in losses. Tech support scams are common, but investment scams cause the greatest financial damage, leading to over $1.2 billion in losses. More than 12,000 “older people” victims reported cryptocurrency-related fraud, emphasizing the need for educational resources to protect this vulnerable group.

Business Email Compromise (BEC): A $55 Billion Global Concern

The FBI’s 2024 Public Service Announcement on Business Email Compromise (BEC) reveals the ongoing impact of these scams. BEC fraud, where attackers compromise email accounts to authorize unauthorized financial transfers, caused over $55 billion in global losses since 2013. These incidents occur in all 50 U.S. states and 186 countries. Criminals are increasingly routing funds through custodial accounts, peer-to-peer platforms, and cryptocurrency exchanges. The FBI recommends two-factor authentication, verifying account changes through secondary channels, and inspecting email URLs for potential fraud.

Strengthening Fraud Defense through Collaboration and Proactive Testing

As fraud tactics evolve, financial institutions must adopt industry-wide information-sharing and proactive, intelligence-driven strategies.

Embracing Information Sharing to Combat Emerging Scams

The Federal Reserve’s Scams Information Sharing Work Group encourages centralized exchanges that connect intelligence across payment systems. By sharing indicators of compromise (IOCs), financial institutions can coordinate responses to emerging threats. Notable information-sharing platforms include:

FS-ISAC Intelligence Exchange: A global community that shares real-time fraud and cyber threat intelligence.
National Cyber Forensics and Training Alliance (NCFTA): Unites industry experts, academics, and government agencies to counter cybercrime through shared intelligence.
International Association of Financial Crimes Investigators (IAFCI): Offers a network for knowledge exchange on financial crime prevention.

These platforms allow institutions to gain insights into threat trends, strengthening fraud detection and prevention capabilities.

Establishing a Dedicated Fraud Threat Intelligence Function

Cyber security teams have strong, proactive threat intelligence specialists. Fraud teams often lack structured threat intelligence programs. Creating a dedicated fraud threat intelligence function enables institutions to stay ahead of evolving tactics, analyze emerging patterns, and bolster defenses.

Fraud Red Team Testing

Traditional defenses often fall short against sophisticated fraud tactics. Red team testing simulates real-world fraud scenarios, allowing organizations to assess readiness, strengthen detection, and proactively mitigate risks. Red Team 27 helps institutions stay resilient by exposing gaps before fraudsters can exploit them.

Fraud Tabletop Exercises (TTX)

Tabletop exercises (TTXs) simulate real-world incidents, testing readiness, communication, and response plans. Fraud teams can use TTXs to practice handling scenarios like check fraud rings, account takeovers, and social engineering attacks, preparing them to detect and respond effectively to fraud.

Fraud Threat Hunting

Cybersecurity threat hunting seeks out threats that automated systems miss. Unlike traditional detection tools, fraud threat hunting uncovers unusual patterns and behaviors indicating an active attack. Fraud threat hunters use techniques like:

Behavioural analysis: Identifying anomalies in spending habits, transaction patterns, or access locations.
Hypothesis-driven investigation: Testing scenarios, such as multiple accounts controlled by a single individual in a fraud ring.
Data correlation: Linking transaction histories, account activities, and user locations to uncover coordinated fraud schemes.

This approach shifts fraud detection from reactive monitoring to proactive investigation, enabling teams to contain complex schemes early and reduce potential losses.

Building a Fraud-Resilient Future

Fraud Awareness Week highlights the urgency of addressing evolving threats. Proactive strategies, consumer education, and strong security practices remain essential for countering sophisticated fraud schemes. By promoting vigilance, awareness, and intelligence-driven prevention, we can create a safer financial landscape for everyone.

Sources:

This article was authored by Jason Bartolacci and Dom Bartolacci from Red Team 27.

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