How to Protect Your Business From Online Fraud
COVID-19 has created a watershed moment in the shift to digital, triggering a wave of online fraud in the process.
Direct messages can be accessed, and passwords changed—with critical infrastructure at stake. By way of social engineering, perpetrators exploit human weakness and vulnerabilities. It raises an unsettling prospect: as the world becomes increasingly digital, what does this mean for security?
Leveraging a rich dataset, this infographic from Equifax unearths several new trends in digital fraud, and shows how businesses can prevent online scams without impacting user experience.
Understanding How Online Fraud Affects You
Here are just a few of the trends impacting lenders, service providers, and the U.S. government.
Credit card fraud is not a new phenomenon. The COVID-19 era, however, has accelerated it for both businesses and consumers. Credit card fraud on new accounts has spiked 88% since 2018, impacting roughly 250,000 U.S. individuals. This is where scammers use a stolen, synthetic identity to open a new account and maximize credit limits.
Meanwhile, consumers are turning to ecommerce experiences more so than ever before to purchase necessities, entertainment, and more. This means shopping with new vendors and making more card-not-present purchases.
With an increase in transactions comes an increase in chargebacks, either from friendly fraud or legitimate disputes. It’s something that hasn’t gone unnoticed: In fact, 40% of businesses have noticed an increase in chargebacks since January of 2020.
Number of Victims
Overall, the number of fraud victims has jumped 20% according to reported fraud victim alerts. In 2019, the most reported fraud alerts affected those aged between 60-69, with an average of $600 in losses.
|Age||Percentage of Losses||Median Loss||Total Losses|
|19 and under||3%||$200||$14M|
|80 and over||5%||$1,600||$72M|
|Total (across all age groups)||100%||$448||$1,115M|
*Based on 1,697,934 fraud reports in 2019, with 51% including age information
Source: Federal Trade Commission (Jan, 2020)
Now, fraudsters are using phishing schemes and COVID-19 scams by setting up fake websites with false COVID-19 information.
Synthetic Identity Risk
Often used in credit card fraud, synthetic identity theft happens when criminals construct a fake identity—based on both real and fake information—to make fraudulent purchases. Synthetic identity fraud can include account piggybacking, setting up a fake business, or teaming up with corrupt merchants. Scams that manipulate people with good credit have shot up 36% since 2018.
Authorized User Abuse
As the pandemic has unfolded, authorized user abuse has increased more than 20%.
Authorized user abuse occurs when low-risk primary card owners “rent” their tradelines with extensive credit histories, high credit limits and solid repayment profiles to others, often, knowingly, to fraudsters.
So how can businesses protect themselves against these increasingly sophisticated tactics?
Navigating the Right Balance
Preventing fraud is simple: stop accepting transactions or allowing new account creation. But, that stifles business growth. More friction isn’t the answer either. Businesses need to navigate the balance of delivering seamless experience and fraud prevention.
To improve online security for any business, it’s important to understand the consumer lifecycle journey. Typically, pain points across this cycle fall within two camps: customer experience or security protections.
|Customer experience||Delivering an optimal experience|
|Log-in or Authentication|
As a result, these can improve businesses’ monetization value and help the bottom line.
Pinpointing these specific, layered solutions can make the difference between winning over a new customer or not—without sacrificing your security.
Online Fraud: What Happens Next?
Still, striking the right balance between customer experience and security can be challenging.
But when these solutions are implemented, a 73% drop in fraud report incidents is reported by some users. Along with this, a double-digit jump in credit approvals takes place, while overhead costs linked to expensive application reviews sink 30%.
To mitigate threats and prevent consumer bottlenecks, businesses can apply solutions such as:
- Account verification
- Digital identity trust
- Document verification
- Multi-factor authentication
Further, businesses can look to establish the level of trust or risk at every interaction across the customer journey, from account creation and login to payment transaction.
High-trust interactions can move along a seamless, VIP experience, while riskier interactions can be dynamically challenged with friction. A vast identity trust network combined with adaptive AI helps businesses to make appropriate decisions at each interaction. This protects both the business and customer experience.
Combined, they provide the early warning technology that thwarts online fraud and digital attacks—with lasting implications for businesses in the COVID-19 digital era.
Decarbonization 101: What Carbon Emissions Are Part Of Your Footprint?
What types of carbon emissions do companies need to be aware of to effectively decarbonize? Here are the 3 scopes of carbon emissions.
What Carbon Emissions Are Part Of Your Footprint?
With many countries and companies formalizing commitments to meeting the Paris Agreement carbon emissions reduction goals, the pressure to decarbonize is on.
A common commitment from organizations is a “net-zero” pledge to both reduce and balance carbon emissions with carbon offsets. Germany, France and the UK have already signed net-zero emissions laws targeting 2050, and the U.S. and Canada recently committed to synchronize efforts towards the same net-zero goal by 2050.
As organizations face mounting pressure from governments and consumers to decarbonize, they need to define the carbon emissions that make up their carbon footprints in order to measure and minimize them.
This infographic from the National Public Utility Council highlights the three scopes of carbon emissions that make up a company’s carbon footprint.
The 3 Scopes of Carbon Emissions To Know
The most commonly used breakdown of a company’s carbon emissions are the three scopes defined by the Greenhouse Gas Protocol, a partnership between the World Resources Institute and Business Council for Sustainable Development.
The GHG Protocol separates carbon emissions into three buckets: emissions caused directly by the company, emissions caused by the company’s consumption of electricity, and emissions caused by activities in a company’s value chain.
Scope 1: Direct emissions
These emissions are direct GHG emissions that occur from sources owned or controlled by the company, and are generally the easiest to track and change. Scope 1 emissions include:
- Company vehicles
- Chemical production (not including biomass combustion)
Scope 2: Indirect electricity emissions
These emissions are indirect GHG emissions from the generation of purchased electricity consumed by the company, which requires tracking both your company’s energy consumption and the relevant electrical output type and emissions from the supplying utility. Scope 2 emissions include:
- Electricity use (e.g. lights, computers, machinery, heating, steam, cooling)
- Emissions occur at the facility where electricity is generated (fossil fuel combustion, etc.)
Scope 3: Value chain emissions
These emissions include all other indirect GHG emissions occurring as a consequence of a company’s activities both upstream and downstream. They aren’t controlled or owned by the company, and many reporting bodies consider them optional to track, but they are often the largest source of a company’s carbon footprint and can be impacted in many different ways. Scope 3 emissions include:
- Purchased goods and services
- Transportation and distribution
- Employee commute
- Business travel
- Use and waste of products
- Company waste disposal
The Carbon Emissions Not Measured
Most uses of the GHG Protocol by companies includes many of the most common and impactful greenhouse gases that were covered by the UN’s 1997 Kyoto Protocol. These include carbon dioxide, methane, and nitrous oxide, as well as other gases and carbon-based compounds.
But the standard doesn’t include other emissions that either act as minor greenhouse gases or are harmful to other aspects of life, such as general pollutants or ozone depletion.
These are emissions that companies aren’t required to track in the pressure to decarbonize, but are still impactful and helpful to reduce:
- Chlorofluorocarbons (CFCs) and Hydrochlorofluorocarbons (HCFCS): These are greenhouse gases used mainly in refrigeration systems and in fire suppression systems (alongside halons) that are regulated by the Montreal Protocol due to their contribution to ozone depletion.
- Nitrogen oxides (NOx): These gases include nitric oxide (NO) and nitrogen dioxide (NO2) and are caused by the combustion of fuels and act as a source of air pollution, contributing to the formation of smog and acid rain.
- Halocarbons: These carbon-halogen compounds have been used historically as solvents, pesticides, refrigerants, adhesives, and plastics, and have been deemed a direct cause of global warming for their role in the depletion of the stratospheric ozone.
There are many different types of carbon emissions for companies (and governments) to consider, measure, and reduce on the path to decarbonization. But that means there are also many places to start.
National Public Utilities Council is the go-to resource for all things decarbonization in the utilities industry. Learn more.
The Paris Agreement: Is The World’s Climate Action Plan on Track?
This graphic shows how close we are to achieving the Paris Agreement’s climate action plan, and what happens if we fail to reach its goal.
Keeping Tabs on the World’s Climate Action Plan
When the Paris Agreement came into force in 2016, it was considered by many to be a step forward in the world’s climate action plan. In the five years that have followed, more and more countries have established carbon neutrality targets.
Has it been enough to keep us on track? This graphic from MSCI shows where we are in relation to the Paris Agreement goal, and what may happen if we fail to reach it.
What is the Paris Agreement?
The Paris Agreement is a legally binding international treaty that lays out a climate action plan. Its goal is to limit global warming to well below 2 degrees Celsius (3.6 degrees Fahrenheit), and preferably to 1.5 degrees Celsius (2.7 degrees Fahrenheit), compared to pre-industrial levels.
A total of 191 countries have solidified their support with formal approval.
Tracking Our Progress
To date, signing nations are not close to hitting the goal set five years ago.
|Scenario||Global Mean Temperature Increase by 2100|
|Pre-industrial baseline||0℃ (0℉)|
|Paris Agreement goal range||1.5-2.0℃ (2.7-3.6℉)|
|Government pledges||3.0-3.2℃ (5.4-5.8℉)|
|Current policies||3.5℃ (6.3℉)|
Source: UN Environment Programme
Based on policies currently in effect, we are on track for 3.5 degrees Celsius global warming by 2100—far beyond the maximum warming goal of 2 degrees. Even if we take government pledges into account, which is the amount by which countries intend to reduce their emissions, we are still far from achieving the Paris Agreement goal.
What about the impact of reduced emissions due to COVID-19 lockdowns? The temporary dip is expected to translate into an insignificant 0.01 degree Celsius reduction of global warming by 2050. Without significant policy action that pursues a more sustainable recovery, the UN Environment Programme projects that we will continue on a dangerous trajectory.
“The pandemic is a warning that we must urgently shift from our destructive development path, which is driving the three planetary crises of climate change, nature loss and pollution.”
—Inger Andersen, Executive Director, United Nations Environment Programme
The World Economic Forum agrees with this viewpoint, and identified climate action failure as one of the most likely and impactful risks of 2021.
The Potential Consequences
If we fall short of the climate action plan, our planet may see numerous negative effects.
- Reduced livable land area: Due to rising sea levels and increased heat stress, low-lying areas and equatorial regions could become uninhabitable.
- Scarce food and water: Global warming may increase water and food scarcity. In particular, fisheries and aquafarming face increasing risks from ocean warming and acidification.
- Loss of life: The World Health Organization projects that climate change will cause 250,000 additional deaths per year between 2030 and 2050.
- Less biodiversity: About 30% of plant and animal species could be extinct by 2070, primarily due to increases in maximum annual temperature.
- Economic losses: At 4 degree celsius warming by 2080-2099, the U.S. could suffer annual losses amounting to 2% of GDP (about $400B). If global warming is limited to 2 degrees, losses would likely drop to 0.5% of GDP.
What steps can we take to reduce these risks?
Advancing Our Climate Action Plan
Everyone, including investors, can support green initiatives to help avoid these consequences. For example, investors may consider company ESG ratings when building a portfolio, and invest in businesses that are contributing to a more sustainable future.
In Part 2 of our Paris Agreement series, we’ll explain how investors can align their portfolio with the Paris Agreement goals.
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