Online fraud has evolved from simple scams to a pervasive threat that can significantly impact businesses and entire industries. As tactics advance, the line between human-led and automated attacks has never been more blurred.
What is behind this? In many cases, bots. Today’s bots can mimic human behavior to an alarming degree. These sophisticated tools execute complex fraud schemes, often undetected, by simulating legitimate online interactions. This new wave of fraud merges human ingenuity with machine precision, creating a multifaceted threat that demands equally sophisticated solutions to safeguard digital ecosystems.
However, many businesses have yet to realize the significant impact online fraud can have. Most cybersecurity and technology professionals, 63%, underestimate online fraud’s financial costs. Many guessed the cost to be somewhere between $500,000 and $3 million annually when it is actually closer to $4.5 million.
This article will explore present-day online fraud, its most significant threats, risks, and associated challenges, the role of advanced technology, and how businesses can protect themselves.
Online Fraud Threats
Most online fraud involves identity theft or financial fraud. The types of online fraud businesses face include account takeover (ATO), when attackers gain unauthorized access to user accounts; ad fraud, falsifying click and display numbers; fake account creation, creating a phony account through stolen credentials or leveraging bots; credential stuffing, a type of cyberattack by automatically inputting stolen credentials to access an account; content scraping, stealing data and content on a site through bots or web crawlers without the appropriate permissions; phishing; and more.
One of the most common cases of business fraud targets e-commerce/online shopping websites. Most retailers lack basic security measures ahead of the busy holiday season. They are at particular risk, considering 100% of the top retailer sites permit fake account creation. Through counterfeit account creation, fraudsters can utilize bots to buy up all the hottest items for the season—the PlayStation 5 Pro, for example—and then exploit the lack of supply they’ve created to sell at higher prices on secondary markets.
In other cases, cybercriminals create entirely fake retail sites where they offer sought-after items at meager prices. This creates problems for the businesses creating these products because shoppers might not realize they are on a fake site, causing customer distrust and damaging brand reputations.
As much of the fraud e-commerce/online retailer sites face, bots are a top culprit. Fraudsters rely on automation to operate at unprecedented scales, creating a constantly evolving threat that businesses struggle to defend against.
Advanced Technology
Recent technological advances create more opportunities for cybercriminals to attack businesses. Machine learning and artificial intelligence (AI) enable bots to mimic human behavior better, evade detection, and execute complex attacks with minimal human involvement. These advanced bots can learn from real-time interactions, making them incredibly challenging to detect.
Businesses often rely on CAPTCHAs (Completely Automated Public Turing Test to Tell Computers and Humans Apart) to protect sites from malicious bot activity. However, new AI-powered bots can bypass CAPTCHA systems quite easily, evading detection over 95% of the time. So, recent developments in AI have not only lowered the barrier to entry for cybercriminals looking to leverage bots for a quick score, but they have also rendered traditional defenses largely irrelevant.
Advanced technology is a double-edged sword when it comes to online fraud. On one hand, fraudsters can leverage generative AI to up their bots’ sophistication, making them easier to deploy at a scale and harder to detect. The good news is advanced technology is also part of the solution.
Protecting Against Cyber Fraud
The fight against cyber fraud requires a multifaceted approach. The first layer of defense is ensuring that all assets across your organization are up to date, from the operating system (OS) to apps and software solutions, equipment firmware, and everywhere in between. Any updates should be made the moment they become available and issued by the developer to protect from vulnerability-based online fraud cases.
The next layer is holding regular employee training beyond the security department. The only consistent thing about today’s threat landscape is that it is always changing. With new technology emerging daily, fraudsters will always find new, creative ways to target and exploit vulnerable businesses. That said, the technology and techniques employees were equipped with to protect themselves even six months ago look completely different from the tools and knowledge they need today.
Keeping training interactive and engaging is equally important to ensure employees retain new information. One way to do this is by creating simulations. Walk employees through a fake, realistic fraud scenario. It is a fun way to test their knowledge and skills and ensure the company's overall cyber hygiene is up to date.
Lastly, invest in your security stack. Businesses must have the best tools and strategies to protect against fraud attempts, especially as bots have become more advanced. Every security stack should include vulnerability protections, such as endpoint solutions and a dedicated online fraud tool that can monitor even the most sophisticated bot attempts in real-time and rely on AI when they can to prevent team burnout.
