If you haven't heard about online scams yet, let us fill you in. Around the second week of September this year, a Três Corações ad was running on YouTube, offering 100 Espresso machines to the first 100 people who completed a satisfaction survey.
After actually completing the survey, the user is taken to a page where they choose their preferred machine, with a note indicating it is free. Next, they are directed to the shipping payment step, where incredible promotional deals on coffee capsules to go with the prize are also offered. And of course, after payment, it says the machine will arrive in x days, but neither it—nor the capsules—ever show up.
This is just one more case of the online scams currently taking place. According to the 2024 Brazilian Public Security Yearbook, 1,965,353 cases of fraud were registered in 2023, while the number of robberies reached 870,320.
The same yearbook indicates that online fraud increased by 13.6%, while total fraud grew by 8.2% between 2022 and 2023.
After the incident came to light, Três Corações announced on its official website that it was not promoting any kind of survey or promotion related to Espresso coffee machines and that it was a SCAM.
Beyond personal online scams, which are evolving and targeting buyers and users, these methods are also being used to target businesses and institutions. You've probably already seen scams related to Pix and fake bank accounts.
How online scams happen
Some of the newest methods reported by users on social media involve an unknown contact making a Pix transfer to a user's bank account and then reaching out via WhatsApp. They then claim the Pix was sent to the wrong account by mistake and ask the recipient to send the money back to the stranger.
At the same time, the scammer requests a refund of the Pix amount through the Central Bank's security feature, which also deducts the funds from the account that received the mistaken transfer. In other words, the scammer receives the money twice: the amount returned directly by the victim, and the bank chargeback also taken from the victim's account, which now goes into the negative because the amount was paid out twice.
According to a LexisNexis Risk Solutions report, “True Cost of Fraud 2023 – Latin America,” with research conducted by Forrester Consulting, businesses in Latin America face a fraud cost 3.9 times higher than the face value of the fraudulent transactions themselves.
In Brazil, according to the report, the fastest-growing type of fraud is fraudulent chargebacks, with 59% of participating companies reporting an increase in fraud in the 12 months prior to the survey. Today, organizations face a cost of fraud cases amounting to R$3.07 for retail markets and R$4.59 for financial services for every real lost.
One of the concerns highlighted in the report, alongside the advancement of scam methods and costs, is the loss of leads and customer trust in a company, as well as prevention methods.
According to the interviewed companies, customers who fall victim to fraud—or believe companies are susceptible to fraudulent activity—lose confidence in the organization's ability to protect their data and trust that it is safe to continue doing business with them.
In the financial services market, fraud impacted lead conversion rates by a drop of 84%, while in retail, it created difficulties in establishing trust with customers by 83%.
Time to prevent
The main challenges companies face in preventing attacks and scams are related to scammers adopting new technologies. With the use of artificial intelligence in scams, it becomes harder for victims to tell real people apart from chatbots and, consequently, to identify legitimate transactions.
Additionally, financial services also presented challenges in email and device verification processes, identity authentication, and implementing anti-fraud processes on both ends: opening new accounts and authenticating end-user login and transaction activity.
Also according to the report, only 6 in 10 organizations have enterprise fraud management solutions that encompass all channels where customers might initiate transactions.
ABM’s performance manager points out a few things to keep in mind for prevention. “The best form of prevention is paying attention to the details. When something sounds too good to be true, it probably is. When it comes via email, check the email domain. It's rare for a Google employee to reach out to someone without an '@google.com' email address. Scammers often use tricks to mask their original email address, but flaws can always be found.”
“The most common attacks on businesses involve ransomware and data capture with extortion demands. A single infected computer can endanger the entire workspace of an entire corporation, even multinationals with multiple offices connected only by Virtual Private Networks. [In this case] the same workflow and process of scrutinizing details applies. If the email isn't from someone you know, don't open any files or links sent. If it's from a known company but you aren't sure, share it with your IT department,” he continues.
Some of the main recommendations for businesses are related to:
- Data-driven approaches to understand the standard behaviors of customers entering the business and, consequently, recognize anomalies;
- Balancing effectiveness between fraud management and user experience, since processes need to be simple so as not to lose customers, but cannot leave openings for attacks; and
- Starting joint efforts with vendors that use and manage emerging technologies, both to know how to deal with scams using new technologies and to adapt more effective security protocols.
A ABM is always ready to help you and support the growth of your business. This includes sharing important information, taking care of every step of your onboarding and journey with our services, and, of course, ensuring the best possible experience while you are with us. Contact an ABM consultant for more information.
