Digital Transactions Authoritative, insightful and timely information for payments professionals
The confluence of the explosion in digital transactions the past two years, hyper-inflation, and pent-up consumer demand has created a perfect storm that is allowing fraudsters to lure consumers into online traps that result in financial losses. A recent report from Sift Science Inc. reveals that such scams account for more than 55% of the content blocked by Sift’s global data network representing more than 34,000 Web sites and apps, compared to more than 30% for spam.
In addition, the average rate of fraudulent content blocked by Sift rose 28% during the first quarter of 2022, compared to the same period a year ago.
While content fraud can occur in the form of scams, it can also occur as spam, misinformation, and phishing scams, as criminals are relying on it more and more to financially bilk consumers on seemingly trustworthy sites, Sift says.
One example favored by fraudsters is a cryptocurrency scam, according to Sift, which surveyed more than 1,100 consumers in April. Respondents report frequently encountering crypto come-ons on social networking sites, marketplaces, gaming sites, and dating apps. Indeed, 43% say they have encountered content scams asking them to join a cryptocurrency exchange, while 22% who have encountered crypto scams have lost money. In terms of monetary losses, fraudsters absconded with a record $14 billion in cryptocurrency in 2021, up 79% from 2020, according to Chainanalysis, a blockchain data platform.
“Fraudsters are treating cryptocurrency as a free-for-all, exploiting the perfect storm of industry growth, lagging regulations, and the lack of consumer education,” Jane Lee, a Sift trust and safety architect, says in a prepared statement.
One reason fraudsters are flocking to social and community Web sites and marketplaces is that they view them as low-cost, profitable vehicles to reach billions of victims. “Lining up with Sift network data, the [Federal Trade Commission] found social media was the most common and profitable way for scammers to con consumers in 2021,” the report says. “Last year, more than 95,000 people reported $770 million lost to fraud initiated on social-media platforms—a staggering eighteenfold increase from 2017 reported losses.”
Social-networking sites are heavily populated by fraudsters, with 65% of respondents saying they are the “spammiest and scammiest” places online, followed by classified ad sites (30%), messaging apps (excluding SMS and native messaging apps) (30%), marketplaces (28%), and dating sites 22%. Respondents were allowed to include multiple Web-site types in their answers. When it comes to frequency with which consumers see content scams, 73% say they see misleading content or false information daily or weekly.
“Businesses can’t keep turning a blind eye to content abuse,” Lee says. “Catching scams on one platform could prevent downstream disasters involving account takeover and financial theft on countless other sites.”
One way to combat content fraud is tracking data patterns and user behavior with machine learning. “By investing in a holistic and flexible solution, companies can stop fraud before account creation and catch content abuse faster, all while building trust among legitimate users and catalyzing growth,” the report says.
