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Last updated on: September 23, 2022
The inception of the internet made way for new ways to make money – and with it, new kinds of fraud. Digital fraud is rife, with companies experiencing an average of 270 cyber attacks in 2021, an ever-rising number year-on-year. Needless to say, cybercrime causes huge financial damage, particularly to businesses, with the cost of cybercrime expected to hit $10.5 trillion by 2025.
Through phishing attacks, identity theft, and malware, online thieves pick the digital pockets of both individuals and companies, stealing money or information.
In this article, you will learn:
Digital, internet or online fraud is when hackers and fraudsters use the internet to defraud victims of their money or information. The words cybercrime and online fraud are used interchangeably, however there is a slight difference.
Cybercrime is a generic term that covers any criminal activity where computers or networks are used by bad actors to harm an individual or a business. This can include cyberstalking and online harassment, as well as digital fraud.
Digital fraud covers all online fraud such as phishing scams, identity theft, online impersonation, ransomware attacks, and porting. The latter consists of hackers transferring your mobile phone number from one service provider to another to access your personal and financial information.
Internet fraudsters are generally out to get your money, but they can also be angling for sensitive information. For individuals that have been defrauded via an online scam, this can be upsetting and financially worrying. For businesses, digital fraud doesn’t just siphon away your hard-earned profits: it can negatively affect the brand reputation that you spent time, effort, and money building. Once you’ve got a bad rep, there’s little you can do to get it back.
Internet fraud is increasing year-on-year with attacks and breaches becoming more and more sophisticated. When the Covid pandemic hit and people transitioned to remote, online working, digital fraud skyrocketed. Since 2015, Business Email Compromise (BEC) attacks have increased at a rate of 2,370%.
According to a recent Forbes article, a study found that the most common causes of cyber attacks were malware (22%) and phishing schemes (20%).
There are a variety of reasons for the increase in online fraud. As we’ve already mentioned, the pandemic sparked a steep rise in scams and cyberattacks. Opportunistic fraudsters took advantage of the chaos imposed by the crisis, such as creating phishing websites and sending out scam emails and texts.
Ecommerce has also been gradually shifting online. At the same time, there are more and more ecommerce platforms popping up, meaning that fraudsters can create a fake website and the customer is none the wiser. Of course, bad actors are also becoming more sophisticated in their tactics, outsmarting businesses and customers.
Phishing is when bad actors pretend to be someone else (usually a trusted brand) in order to trick people out of their money or sensitive information. Phishing can work in a number of ways, such as through emails or texts containing malicious links or requesting private or financial information under the guise of a trusted entity. Phishing can also occur in the shape of fake websites.
Similar domain name phishing attacks take advantage of the innocent mistake of mistyping a website address. This is also known as typosquatting. The fraudster will create a lookalike website but the URL will be very slightly different. For example, amzon.com rather than amazon.com, or faceb00k rather than facebook. If you’re not sure what the telltale signs of a fake website are, then you may be in for a nasty surprise if you’ve compromised your financial or private details on a lookalike platform.
You may be directed to a fake website through other means than simply mistyping the address. Black hat SEO techniques are used by fraudsters to make sure their phony website ranks highly on search engines, or a phishing email may direct you there.
Online impersonation is a branch of phishing. It involves bad actors impersonating – that is, pretending to be – a brand or a trusted individual in order to trick unsuspecting individuals. Online impersonation can take many forms.
Executive impersonation, also known as CEO fraud, is one way fraudsters try to trick company employees out of sensitive information or money. Bad actors create fake, lookalike email addresses that purport to be from senior executives in the company. They send urgent emails to lower down employees requesting a money transfer or information. This type of scam exploded during the pandemic. Bank impersonation scams are another big one that can defraud individuals of a lot of money.
We’ve probably all seen fake social media accounts. These are also known as social media impersonation scams, and they consist of fraudsters using the identifying elements of a person or a company to fool users, usually for financial purposes.
Malware, or malicious hardware, is another common type of digital fraud that is spread through clicking on emails, links, apps, and ads. Malware comes in different forms, most commonly, the computer virus. This is a malicious computer code that can spread to other computers if people open or launch the infected message or program. Usually, the aim is to steal sensitive data or damage a device.
All malware is designed to either monitor your web browsing or keyboard strokes, steal data and information, access private systems, or damage a computer or network. Keyloggers, for example, are another type of malware that records the keyboard strokes when you type, allowing criminals to learn your passwords and usernames.
Identity theft is when someone steals your personal information, such as your name, address, date of birth, or credit card details, to make a financial gain (usually). One in five Europeans have experienced identity theft in the past two years, with a potential for huge financial losses to both businesses and individuals.
Identity theft is different from impersonation in that impersonation is when someone pretends to be you or your business. Identity theft, however, is where someone steals your identifying factors to make a gain of some sort. The two types of digital fraud can cross over, for example, with business identity theft.
With the increasing digitalization of businesses, comes the need to protect those businesses from digital fraud. Impersonation, phishing attacks, malware and identity theft cost businesses and individuals billions – even trillions – every year. Fraudsters are becoming more and more intelligent, meaning preventative measures have to constantly improve and outwit any malicious forces.
Software especially designed to automatically detect and take down the offending parties is the safest and most effective way at keeping your brand intact.
You can get automated Brand Impersonation Protection with Red Points so that you can concentrate on building your brand reputation and making sales, rather than fighting off bad actors.