Scams are becoming more convincing and costly
Scams directly targeting consumers continue to increase in both complexity and volume, according to Visa.
Consumers are increasingly targeted by scammers, who rely on heightened emotions to create fraud opportunities. While the number of individual scam reports from June to December decreased, the total money lost increased, indicating scammers are targeting victims with more effective – and costly – scams.
According to another Visa survey, more than one-third of adults surveyed decided not to report scams committed against them, suggesting the losses are higher than reported.
“With the use of generative AI and other emerging technologies, scams are more convincing than ever, leading to unprecedented losses for consumers,” said Paul Fabara, Chief Risk and Client Services Officer, Visa.
Top consumer scams
Pig butchering scams
Capitalizing on holidays like Valentine’s Day and New Year’s Eve through social media and dating sites, scammers lure victims into online relationships and convince them to invest in fake cryptocurrency trading platforms. Leveraging AI to create more convincing campaigns, pig butchering scams have led to billions of dollars of losses for consumers. Per Visa’s study, 10% of surveyed adults have been targeted in a pig butchering scam.
Inheritance scams
Victims are notified about an inheritance left by a long-lost relative, often coming from a seemingly legitimate law firm or other professional entity. Red flags include secrecy, urgency, requests for personal information, and the need for an initial payment to secure future gains. 15% of US adults surveyed by Visa have been targeted in inheritance scams.
Humanitarian relief scams
Capitalizing on tragic current events, these scams exploit calls for donations across social media to defraud unsuspecting donors.
Triangulation fraud
Threat actors create illegitimate online storefronts offering in-demand products at a low cost to collect payment information. Legitimate merchants fulfill the online order, but payment information is already compromised. Triangulation scams cost merchants up to $1 billion in a single month.
Threat actors exploit network vulnerabilities
In addition to cardholders, threat actors are continually probing organizations and networks for complex weaknesses, leveraging new technologies to exploit vulnerabilities with far-reaching impacts.
Supply chains and third-party services are increasingly targeted with campaigns designed to maximize the impact of a single breach. AI has been increasingly adopted by fraudsters, allowing them to identify vulnerabilities within fraud controls implemented by banks.
Purchase Return Authorization (PRA) fraud attacks increased 83% over the previous five-month period, with each successful attack leading to approximately $115,000 in potential fraud losses to banks.
Ransomware cases increased 300% from June to December 2023 when compared to the same period in 2022. Visa forecasts that ransomware threat actors will continue to target critical infrastructure, including financial organizations.