With the use of online payment gateways and digital payment apps, the scope for payment fraud has also increased. While security layers and features are developing in fintech apps, security threats are also evolving in the cyber threat scenario. Payment frauds are some of the major cybersecurity threats that people and merchants face today. What is payment fraud online has an extensive answer, and to completely understand it, you have to understand the types and nature of payment frauds in India.
What Is a Payment Fraud?
Payment fraud online is a type of scam that is done through unauthorised access to someone’s transactional account and payment information. By invading the multiple security layers of a payment app, cybercriminals, and malicious entities are committing payment fraud. Payment fraud is a type of financial fraud that happens through online payment portals where fraudsters are using unauthorised methods to steal money from people and companies.
Payment fraud is happening through different methods and channels today. In most cases, seasoned scammers and cybercriminals use different methods to steal Payment IDs, credit card or debit card information, and other details of people to enter the payment account and steal money from the account.
Payment frauds are now being committed by organised groups of trained cybercriminals who have an extensive network, which is also their safety net. They are doing this malicious action very smoothly, and their footprints are often untraceable. The payment information they steal from different users is manipulated with very sophisticated tools and techniques of fraud.
Payment fraud networks are active around the world and commit digital robbery on an international scale. These cybercriminals are quick to study the vulnerabilities of the payment apps and networks so that they can infiltrate them and steal money from the members of the network.
To protect against payment fraud, payment networks, and apps should use robust and strong payment security measures and other safety features. Multiple layers of security and proper authorization algorithms integrated into the payment app are a complete necessity. The target of payment frauds and scamsters are businesses and people across the industry segments.
Types of Payment Frauds
There are many types of payment fraud. For example, these are the most prevalent ones.
Online Phishing or spoofing is a major way of scamming payment apps and frameworks. Online Phishing is done through fraudulent websites and false emails. The emails and other communication will look real and believable to people. Payment frauds gain access to usernames, passwords, and other sensitive information related to your financial account to steal money from the account.
The easiest way of doing this is to send an email or an SMS that redirects the user to a certain website so that the user is asked for his personal information and submits it, thinking it is an official website. The information gathered is later used to commit fraud against his financial account.
Thievery is no longer just limited to things; online frauds are now committing data theft. Data theft happens when malicious people and entities steal important and sensitive data from different accounts and use it to steal money and assets. Since today, all the assets and things of people are linked to their digital accounts, digital data theft is a serious security concern. Data theft is the illegal way of accessing the data of other people or businesses and using it to take malicious actions, especially in the financial sector.
Payment frauds are also targeted towards identity theft and stealing personal information of the person. The process of identity theft is a malicious one that focuses on taking important information like the name, address, email ID, account number, PAN card details, Aadhar card details, etc.
These personal information bits are used to take money from a person’s account illicitly, posing as the person and gaining access to the financial account to take money from the account. Identity theft can be very damaging to people’s reputations and financial assets. Identity theft can be very serious and affect a person’s life to a great extent. A person has to spend a lot of time rectifying the issues with his identity after the identity theft.
A customer might go through chargeback fraud and claim a refund, saying that the purchase was made fraudulently. Even if the customer has actually bought the products and spent money, he claims that he has not made the purchase himself and, thus, asks for a refund on the transaction.
In the process, he profits from the things that he has bought but does not spend any money on them. So, he gets the products for free and saves money. Chargeback frauds are financial scams that hit companies and businesses very badly. Businesses and companies have mechanisms and algorithms in place to protect their assets from chargeback fraud.
There are other forms of payment fraud, like card not present fraud and account takeover fraud that can also affect different people and businesses. There are some ways in which you can reduce the chances of payment fraud. For example,
Transaction monitoring through the employment of real-time monitoring techniques and the use of digital monitoring experience across the ends of an app. The use of cutting-edge technology, like the use of random forest and logistic regression, to analyse transactional data and help financial apps maintain a vigilant watch over user activity can reduce the chances of payment fraud.
Today, predictive analytics, big data, and other technical practices are used to protect people and businesses from fraudulent activity on the web. With the use of new technology and new techniques to increase cybersecurity, the scope for payment frauds is reducing, but it is also necessary to increase the level of awareness against different types of payment frauds so that people are well protected from malicious financial activity. Companies need to integrate security layers and provisions into their financial apps to protect users from fraud.