Daily Deposit 2.21.2023

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COVID and fraud. what’s changed?

How fraud changed with COVID-19

Crises can bring out the best of us, and the worst of us. Unfortunately, the pandemic was no different and the fraudster roaches living among us came out in droves.

We know that once lockdown happened, people became vulnerable. Business owners that didn't know how long they would be shut down for, and how they're low margin business could be kept afloat. The world was swept by fear, and this opened the door for more nefarious activity than before.

These 3 conditions were some major contributors to swindlers:

1) Increased use of online/remote services: In 2020, online spending surged 44%, that's another $105 billion… As e-commerce surged, and fraudsters started taking advantage of this by using stolen or fraudulent information to make bogus purchases. Scammers blended in with the increased traffic and newbies on the scene.

Businesses had to protect themselves by paying close attention to the amount of each transaction, using fraud protection platforms, and being cautious of payment types other than credit cards. Not everything on the internet is as harmless as cats-playing-piano videos.

2) Federal financial assistance: During the pandemic, 62% of businesses received aid. That's 5.2 million individual PPP loans receiving $525 billion!

Fraudsters saw it as an opportunity to steal money. They stole the identities of legitimate businesses and used public information to scam people out of sensitive information. With so many businesses closed or operating with reduced staff, it was like stealing candy from a baby.

3) Security risk from WFH: Nearly 1/3 of companies increased teleworking opportunities for employees. We're talking in the ballpark of 40% of the workforce now works from home most of the time.

To allow the sudden shift in work environment, many companies relaxed security protocols. We were just asking for it at this point. Cyber fraud and business email compromise (BEC) are among the activities that saw an increase, with criminals using phishing and malicious software to trick victims into transferring funds or data to their accounts. The FBI received more than 19,000 complaints of BEC, costing victims nearly $1.8 billion.

Times are a changing though. There is a strong push "back to normal" as we see even Big Tech returning the workforce back to the workplace. And yet the risk still remains. Many of us won't be able to resist the temptation to help a Nigerian Prince… Stay vigilant depositors!

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