As tech advances at a rapid rate fraudsters and criminals are welcoming new ways to trick people out of their money. But what could the future hold for fraud? As we see new technologies permeate our day-to-day lives and the internet become a more vital part of our existence, crooks may find more opportunities for attack.
Here we look at what the future of fraud could look like, what technologies could be most at risk, and what the experts think may happen.
A brief history of fraud
To look to the future, we must first evaluate the past. And fraud has a rich history.
The first recorded account of fraud took place in 300 B.C. A sea merchant named Hegestratos took out what’s known as bottomry. It was essentially an insurance policy that covered his ship and his cargo. It worked like this: the merchant borrowed money, when the ship arrived safely at its destination with its cargo (which for Hegestratos was corn) the loan was then paid back with interest.
Bottomry was common practice. Fraud, however, wasn’t. Hegestratos decided to attempt what is now known as party fraud. He was going to sink his empty ship, sell the corn, and keep the loan, making him possibly the first human ever recorded to attempt such a crime. We say attempt because he wasn’t successful. He was caught in the act by his crew and chased off the ship where he drowned in his escape.
While this is the first instance of recorded fraud, it isn’t likely that it’s the first instance of it. It’s probably been around as long as commerce has. And from Hegestratos back in 300 B.C, we have seen fraud grow and evolve just as trade has.
Fast forward to the present day and fraudulent crimes are rife and come in many forms. From tax fraud to party fraud (just like Hegestratos) – it’s thought that there are more than 20,000 acts of fraud committed every day.
Again, to look to the future of fraud we need to understand the past and the present. But what types of fraud are committed so often today? Here’s a brief rundown of the more common types of fraud.
Identity fraud is a crime where one person uses the identity of another to dupe, defraud, and deceive someone. By obtaining personal details about a person they can assume their identity and then use that identity to commit crimes.
Using someone’s personal details a fraudster can:
- Open a bank account
- Take over your existing account
- Purchase items in your name
- Obtain identification papers such as driving licenses in your name
This covers a number of frauds that target an individual. It most commonly includes crimes such as forgery, benefit fraud, credit card fraud, and mortgage fraud.
Advance fee fraud
The act of advance fee fraud is where a criminal targets an individual to take an advance or upfront payment for a product or service that never materialises. These types of fraud are quite commonly committed by ‘cowboy’ builders. They can include career opportunity scams, loan scams, dating fraud, and rental fraud.
Online fraud, as the name suggests, is fraud committed on the internet. Fraud online is becoming more and more common as criminals are finding it easier and easier to hide their identity and use new technologies to bust into a individuals private data. The types of fraud that can be committed online are numerous and incorporate the varying types listed here, like corporate & individual fraud.
This type of fraud covers any fraudulent act that damages a business. These can include general frauds covered above that attack a specific business or a sector specific fraud.
The current state of fraud
In the past ten years’ fraud has seen serious changes. No longer is it the case that we see individuals testing the boundaries of what they can get away with. Many fraud criminals operate within much more sophisticated setups, operating new types of technology and new techniques to dupe individuals and businesses out of their assets. In the criminal world there are even criminals with specialised skills working for organisations to crack security systems. But what do these recent changes indicate for the future of fraud and what can we do to pre-empt the risks?
Tech that’ll transform fraud
It looks as though, as our technology becomes more advanced, the tricks and techniques used by fraudsters will become more complex.
“As we continue to design, build and implement new automated systems and FinTech solutions the fraud will follow. The cracks in any and all new systems will be found and exploited by the fraudsters. The more we begin to rely on choice by computer programs and less upon human experience the great the chances for a larger serial fraud.” – L. Burke Files
It’s a double edged sword. We are seeing advancements in technology designed to help detect fraud at a rapid rate. But this advancement in technology also makes for much more complex fraud schemes. Money is leaning to a much more digital focus. People are now able to pay at a swipe of their phone and millennials do most of their banking with the computers in their pocket. This pivot and growth won’t slow, either. And as more and more of us turn to storing our personal data within cloud software and focussing on centralising our lives digitally, we’re making much larger targets for a fraudster to hit.
One other area of serious concern for many surveying the current landscape of fraud is health care. Mr Burke also says that. “Many medical devices from heart rate monitors, to infusion pumps, dialysis machines all run on older software platforms and are connected to each other and to the hospital via wifi. While the hospital's computers may be secure - these devices are not, and criminals are entering hospital systems through these insecure devices. There are three fears, one the loss of all employee information to fraudsters” - quoteeeee
What can be done?
So now we know that fraud is set to evolve alongside the technology we are entrusting with our data, the real question is: what can be done?
Security measures must be put in place to help safeguard the digital technology we are becoming more and more reliant on. The first and most important way that we can tackle emerging fraud techniques is with the user. As consumers we must learn to be more proactive in protecting ourselves from fraud. One of the biggest problems is that humans aren’t good at catching fraud. In fact, studies show that our accuracy in catching the criminal act are barely better than chance. So what technologies are emerging that are helping us weed out the criminals?
Catching the spammers
No matter what email client you use, we’re sure it’ll have a spam filter built in. This is to help siphon the junk emails you receive from the genuine emails. But these junk emails often include spam that are working to scam unsuspecting victims out of money. But a company named ZapFraud noted that fraudsters were creating emails that included personalised information that help trick the spam filter and find its way into your inbox. So they set out to create a filter that worked differently. It spots narrative patterns that are used more often in fraud and spam mail. If for example, the technology spots an email that mentions a sum of money and then a call to action, they can mark it up as spam.
Real time warnings
Not all fraud is committed online. Sometimes fraudsters take to the streets, begging for money that’s often used for a completely different purpose to the one proposed. But imagine if you’re phone could alert you to this fact. It sounds far-fetched, but it isn’t too far into the future that this might happen. There is technology out there that gathers voice-biometrics that is able to identify individuals. Or even catch voice pitch and emotion that indicate deceit.
Spotting trends through social media
Some studies are examining social media streams to try and spot rumours or behaviours of fraudulent posts. In the run up to the US election, there were many ‘fake news’ websites posting speculation & misinformation about candidates and the political climate and fuelling it through social media. Then, as the visitors rolled in through their click-bait headlines, the fake news site creators would earn money through advertising revenues.
Being able to spot, follow, and identify fake news sites would help stem the issue.
Studies have shown that hiding the truth requires more brain power than telling a basic truth. This means then, that in the future, technology may exist that allows us to spot lies with much more accuracy. This technique will help catch out fraud criminals accomplices, spot when someone is concealing a fraud, or aiding fraudulent activities.
Fraudulent crimes will continue. Just as they have since the dawn of commerce. Where there’s a chink in the armour, there will be a criminal looking expose it and earn a quick buck form an innocent victim. The real uncertainty in fraud’s future is in how we tackle it and under what technologies it’ll thrive.