Online Fraud Is Rising as the Economy Recovers. Here's How to Protect Yourself

Fraudsters are not only growing more prevalent, they're also getting smarter.

Over the last decade, the internet has inexorably ingrained itself into our everyday lives -- a process cemented by the pandemic that drove even the most obstinate of us to connect virtually. These days, shopping, communicating, and even many jobs are now done, if not exclusively, then at least extensively, online.

A natural part of the transition from analog to digital life has been a rapid rise in online fraud as the scammers follow the herd. Unfortunately, as with many things, the pandemic seems to have made it all much worse.

According to the FTC, consumer complaints increased by more than 1.5 million between 2019 and 2020, with 3.5 million people reporting being a victim of fraud or identity theft in 2020. And 2021 hasn't been much better.

More spending = more fraud opportunities

While many areas have opened for in-person shopping and travel visits, the rate of online fraud hasn't slowed any in 2021 -- it's actually done the opposite. One study by credit bureau TransUnion found that digital fraud attempts increased an average of 23.82% worldwide in the first quarter of 2021.

According to Melissa Gaddis, Senior Director of Customer Success, Global Fraud Solutions at TransUnion, the recent rise in digital fraud has a lot to do with the recovering economy. As consumers gain confidence in their finances and increase their spending, fraud also increases.

“The bottom line is opportunity," says Gaddis. "As the economy opens up and people feel they have more discretionary income, the number of digital transactions in the travel and leisure industry are exploding as compared to the same quarter last year. This gives fraudsters more opportunities to target credit card transactions and perpetrate fraud among those increased volumes.”

Phishing scams are many and varied

Of course, the increase in digital fraud isn't only due to increased spending. Scammers are also, sadly, getting better at taking our data.

Phishing scams are still the most prevalent way fraudsters are stealing our information, but these aren't your parents' scams. As Gaddis says, thieves have gotten smarter -- and sneakier.

"As much awareness as there is in the news about phishing and being aware of what you are doing on the internet, the schemes we are seeing now are becoming more sophisticated than the Nigerian prince scams everyone has heard of. Today, fraudsters are taking advantage of disasters, such as the pandemic, and preying on people’s need for services."

One example Gaddis gave was of folks waiting to hear about unemployment checks during the pandemic. What may seem like a legitimate email referencing your unemployment application could easily be a phishing scam from an opportunistic fraudster. Handing over your information could then mean the scammer -- not you -- gets your unemployment money.

Modern scammers aren't using badly cut-and-pasted templates with misspellings (or, at least not always). Instead, email addresses can be spoofed and email templates meticulously copied to mimic official correspondence, making it harder to spot a fake. But there are still a few things you can do to keep yourself (and your data) safe:

• Always double-check email addresses. The name displayed by an email address can be faked by a fraudster, but your email platform should give you the ability to see the actual email address that sent the email. If it doesn't seem legit, delete and report.
• Use a trusted search engine instead of in-email links. If an email asks you to log into your account, use a safe, bookmarked link or a link from a search engine instead of using a link provided in the email. That way, you won't accidentally give your login credentials to a scammer.
• Stick to trusted online retailers. Although we all want to support small businesses, you need to be extra careful when shopping with unknown retailers online. Stick to websites that use a trusted third-party payment system, such as PayPal or Square.
• Use credit cards when you shop online. By law, your liability for credit card fraud is limited to $50 -- and most issuers won't even charge you that much. Some card issuers even offer virtual credit cards, which provide disposable card numbers that keep your actual account information safe.
• Report suspected fraud right away. If you think you may have been a victim of fraud or identity theft, report it as soon as possible. This minimizes the damage the scammer can do with your information.

Companies are on alert, too

Although consumers can certainly do a lot to help protect their data, at a certain point, it's out of their hands -- and in those of the retailer. But while companies are well aware of the part they have to play in protecting their customers' information, it's not quite as simple as just beefing up their online security.

Perhaps the biggest struggle many retailers face is walking the fine line between good security and too much security. (Who out there hasn't gotten frustrated with proving, for the third time, that they're not a robot?!)

According to Gaddis, the trick lies in getting to know your customers so well that you can spot fraudsters before they have the chance to wreak havoc.

"This is an opportunity to really understand their traffic so they stop the egregious activity while lowering friction for consumers to interact," Gaddis explains. "A lot of this is done by using solutions behind the scenes, like TruValidate’s device risk and device-based authentication solutions. Overall, businesses need to be aware of what 'normal' looks like for their customer base so they can spot the anomalies and target those.”