Cybercrime is becoming increasingly accessible. Forget the image of cybercriminals wearing masks, using sophisticated computers, and operating only in certain countries. Today, cybercrime is a skill that can be easily learned by anyone. As a response to this, fraud prevention has become more critical than ever.
AI-powered fraud, such as deepfake scams and social engineering, is no longer rare. These fraud tactics have become widespread and have caused significant losses to both individuals and businesses.
So, what types of fraud should you be aware of, and what fraud prevention strategies can be implemented today? Let’s dive into the details in this article.
What is Fraud Prevention?
Fraud prevention refers to a series of measures and strategies designed to prevent fraud before losses occur. It involves various techniques such as biometric authentication, data encryption, real-time transaction monitoring, and AI-based fraud detection to identify suspicious patterns.
Many people mistakenly believe that fraud prevention and fraud detection are the same, but they actually serve different functions in protecting businesses from digital fraud. Here’s the difference:
- Fraud Prevention: Focuses on stopping fraud before it happens, using technologies like biometric authentication, AI, and real-time monitoring.
- Fraud Detection: Focuses on identifying and responding to fraud that has already occurred, utilizing data analysis, early warning systems, and manual investigation to detect anomalies.
Companies that rely solely on fraud detection without a fraud prevention strategy risk suffering significant financial losses due to data breaches and unauthorized transactions before they even realize it. Therefore, a combination of fraud prevention and fraud detection is crucial for safeguarding businesses and maintaining customer trust.
The Most Prevalent Types of Fraud
1. Deepfake Fraud
Artificial intelligence (AI) has significantly advanced various sectors, but it has also introduced new risks, particularly deepfake fraud. Deepfake technology uses AI to create or manipulate visual and audio content to make it appear authentic.
VIDA reported a 1,540% increase in deepfake-related fraud in the Asia-Pacific region between 2022 and 2023. Deloitte predicts that by 2027, deepfake fraud will escalate into a multi-billion-dollar global issue.
One common example is fake videos featuring celebrities or public figures endorsing certain products or services. While this may seem like entertainment, such fraudulent videos can deceive audiences and spread misinformation.
Deepfake technology is also being used to bypass identity verification systems, especially those based on biometric facial recognition, allowing cybercriminals to access accounts or conduct illegal transactions while impersonating someone else.
2. Social Engineering
Social engineering is a psychological manipulation technique used by fraudsters to deceive individuals into disclosing sensitive information or performing actions that benefit the attacker. Examples include phishing (email fraud), smishing (SMS phishing), and vishing (voice phishing).
In Indonesia, social engineering attacks occur almost daily. A study by KnowBe4 found that more than 90% of phishing attacks involve social engineering tactics.
3. Account Takeover (ATO)
Account takeover happens when fraudsters gain unauthorized access to a user’s account, such as banking, e-commerce, or social media accounts. This often results from weak passwords or social engineering attacks.
In 2023, global account takeover fraud increased by 150%. In Indonesia, 97% of businesses faced account takeover attempts in 2024.
4. Document Forgery
Contract and legal document forgery is a significant threat, particularly in the financial, real estate, and legal services sectors. Unfortunately, many businesses still lack effective verification systems, making them vulnerable to such fraud.
Document forgery not only affects businesses but also has direct consequences for individuals. For businesses, the risks are even greater: 48% suffer financial losses, data breaches, and reputational damage due to fraudulent documentation.
VIDA’s Fraud Prevention Solutions
VIDA offers three primary layers of fraud prevention: identity verification, user authentication, and fraud detection. Here’s how they work:
1. Identity Verification
Identity verification is the first step in digital security. This process occurs when a user registers for a service to ensure that the personal data provided is legitimate and not manipulated.
A secure identity verification system uses various technologies to confirm the authenticity of user data, including biometric verification, document verification, and income verification.
Why is identity verification crucial? Because cybercriminals frequently use stolen data to create fake accounts. Without a robust verification system, businesses become susceptible to fraudulent identities infiltrating their platforms for various types of scams.
2. User Authentication
Once identity verification is completed, the next step is user authentication. Authentication acts as an additional security layer to ensure that only the rightful account owner can perform transactions or access sensitive data.
Secure authentication methods include:
- Biometric authentication: Facial recognition or fingerprint scanning.
- Device authentication: Binding a user’s account to a trusted device.
For instance, in high-value financial transactions, authentication ensures that only the real account owner can authorize the transaction.
3. Fraud Detection
Even with strong identity verification and authentication, fraudsters may still attempt to bypass security measures. This is where fraud detection systems come into play.
Fraud detection operates in real-time, monitoring and identifying suspicious activities on user accounts. VIDA offers three fraud detection layers:
- Fraud Scanner: Monitors KYC data, detects suspicious patterns, and rejects fake biometric data.
- Deepfake Detector: Identifies manipulations like morphing and face-swapping before approving biometric verification.
- Deepfake Shield: Uses active and passive liveness detection to prevent injection attacks.
As digital fraud threats continue to evolve, businesses can no longer rely on conventional security systems. AI-based fraud prevention technologies such as Liveness Detection, Fraud Scanner, and Deepfake Shield offer modern, proactive solutions that detect and prevent cyberattacks before they occur.
For industries dealing with financial transactions and sensitive data, security is no longer optional, it’s mandatory. Looking for an advanced fraud prevention system? Learn more about VIDA’s solutions!
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