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3 Strange types of Fraud you will hear a lot more about

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Just when you though that you knew all the different types of fraudulent schemes in the world (See: A complete list of 109 fraud and scam types) along come three more to make you lie awake at night….

1. OmniChannel Fraud

As seen on https://blog.malwarebytes.com/101/2018/09/the-many-faces-of-omnichannel-fraud/

Omnichannel—also spelled omni-channel—is a compound word composed of the words “omnis” and “channel.” Omnis is the Latin word for “all,” while channel, in this case, pertains to a way of making something, such as information or a product, available. With these in mind, one could roughly define omnichannel as available in all channels, irrespective of the business or the industry it belongs to.

For example:

  • In omnichannel banking, the customer can access their accounts anywhere, pay their bills anywhere, and get money anywhere.
  • In omnichannel retail, the customer can browse items anywhere, pay anywhere, and return them anywhere.

Whilst the above may sound extremely convenient to the ears of consumers and businesses, it’s actually easier said than done. A lot of planning, executing, aligning of goals and core values, and most importantly, securing is involved.

Types of fraud in omnichannel

Organizations looking into adopting an omnichannel approach should also look into ways they can protect user data, user accounts, and sensitive financial data (if they haven’t already), on top of protecting their physical and digital assets. Below, we have identified several fraud types that are found in an omnichannel retail environment. (Note that some of these can also be found in multi-channel retail environments as well):

  • Card-not-present (CNP) fraud. A well-known scam where a fraudster uses stolen card and owner details to make online or over-the-phone purchases. As the fraudster cannot show the card to the retailer for visual inspection, they get away with the fraudulent purchase.
  • Cross-border or cross-channel fraud. Fraudsters steal credentials and sensitive personal information used by their target in one channel so they can commit fraud to another or an associated channel.
  • Click-and-collect fraud. This is otherwise known as the “buy online, pick-up-in-store” fraud. This occurs when a fraudster, armed with stolen card details and details of the real owners (for backup), buys online then picks up the item from the store. The purchase is flagged as fraudulent.
  • Card-testing fraud. Also known as “stolen card number testing,” this tactic occurs when fraudsters use a merchant’s website to test if stolen card credentials are still valid by making small, incremental purchases. According to Radial, an omnichannel solutions company, there has been a 200 percent increase in card-testing fraud in 2017.
  • Return fraud. This comes in many shapes and sizes. One type, which is friendly fraud, happens when a seemingly legitimate buyer purchases an item online, receives it, and then contacts their card issuer to claim that they never received the item they bought. Return fraud also happens when a buyer purchases electronics, takes out their expensive parts, and then returns the item to the store.
  • Mobile payment fraud. In a world that is now described as “mobile-first,” it’s only logical to expect that fraud born from mobile device usage could outpace web fraud. And it has. Before, mobile browsers were typically the point-of-origin of such fraud; nowadays, fraud can be done via mobile apps.

2. Religious Based Fraud

CNBC recently highlighted this ‘phenomenon here: https://www.cnbc.com/2018/09/06/religious-based-financial-fraud-is-rampant-heres-how-to-fight-it.html

Of all the ways scammers can steal your money, experts agree the most difficult frauds to combat are the ones that seek to turn your own faith against you.

Law enforcement officials call them affinity frauds – targeting victims through a common bond, most often religion. While nationwide statistics are hard to come by because the scams are so widespread, it’s fair to say that affinity fraud losses run into the billions of dollars per year.

CNBC use Ephren Taylor as an example, who fleeced some $16 million from members of church flocks in 43 states by preaching so-called “prosperity gospel.

The FBI says it is investigating $2 billion worth of affinity fraud in Utah alone, where an estimated 60 percent of the population belongs to the Mormon church. The church itself has issued warnings to the faithful, the Utah Legislature has increased penalties for financial fraud and the state attorney general is making it easier for residents to check out prospective investment advisors and business partners.

One reason why affinity fraud is so hard to beat is that, like any predator, an affinity fraudster targets the weakest of the flock – those who are the most trusting, and in many cases, the most naive. The best defense is knowledge.

3. Cryptocurrency Fraud

It is inevitable that Cryptocurrency Fraud would become a ‘thing’ following the hype.

Cryptocurrency is a fraudster’s dream for several reasons:

  • Very few people really understand it.
  • It’s mostly anonymous.
  • It’s largely unregulated.

A bit of common sense, lots of caution and a dose of knowledge will keep you safe from most fraudulent schemes and miscreants looking to scam you.

During November 2017, the Australian Competition and Consumer Commission (ACCC) revealed a 126% spike in bitcoin-related scams coinciding with the crypto market bull run toward the tail-end of 2016.

In July 2018 Australia’s national consumer watchdog warned that cryptocurrency trading scams had grown ‘significantly’ over a 12-month period and were now the second most-common kind of investment scam in the country.

In August 2018 the City of London Police said that there had been 203 reports of cryptocurrency fraud during June and July, according to data from Action Fraud, its national fraud and cyber crime reporting centre. The victims lost £2.1m – an average of £10,096 per person.

Business.com has the following guidelines to help spot Cryptocurrency Fraud and define an authentic digital cryptocurrency company as:

  • Powered by blockchain.
  • With a business plan/model.
  • Solving a real problem.
  • Featuring digital currency liquidity.
  • With real people behind the company.
  • That specifies ICO (initial coin offering) rules and conditions.