Financial fraud cases show up in the headlines regularly. Yet people don’t necessarily connect these cases to cybersecurity. However, it’s often true that good cybersecurity makes a person or company less likely to experience financial fraud.
Cybersecurity Starts With Awareness
Many scammers who operate online pose as legitimate brands, such as banks or e-commerce companies. Some of them send emails about invoices and online orders with details that sound correct. They have business logos or graphics that make them seem realistic. Nevertheless, when people look closely, they’ll notice a few things that don’t add up.
In one phone-based phishing scam targeting Americans, the fraud artist impersonated someone from the customer’s bank. The customer began to get suspicious, however, when the impersonator asked for a member number and PIN.
Banks often remind people that they’ll never ask for PINs. Thankfully, that was what caused this “almost-victim” to report the conversation. Though this example occurred over the phone, there’s one cybersecurity element to keep in mind — the scammer used a password reset code to get into the customer’s account.
The customer received a text message from their bank’s real number, which he believed was a verification code. It wasn’t until after he read the digits to the scammer that he realized what they were for. Following this, and after changing the password, the scammer could access the account and list some of the recent transactions.
If the “almost-victim” hadn’t realized what was going on, the scammer would have likely drained their account. Whether fraud takes place online or off, it’s vital to be aware of whether the information being asked is appropriate or not.
Workplace Training Could Pinpoint Issues
Banks often deal with financial fraud cases. However, during the worst-case scenarios, they perpetuate them. In one 2014 matter, a bank agreed to pay $614 million after allegedly originating and underwriting non-compliant mortgage loans. The institution then submitted these loans to federal bodies for insurance coverage.
In another case, authorities caught a bank employee in Ireland operating a workplace computer dishonestly to either gain money, or make someone else lose money. These two incidents are different, but they both happened internally. Fraud can occur online or off, but the massive reach of the internet makes it easier for criminals to cause widespread damage.
If employees receive cybersecurity training and stay abreast of recent issues, they’ll be better equipped to notice instances of potential financial fraud. In fact, even password setting and sharing etiquette could manage financial threats.
The Connection Between Breaches and Fraud
When people or organizations don’t have adequate cybersecurity, they’re more likely to experience data breaches. Hackers know that successful infiltration can be tremendously lucrative. As a result, it’s best to treat a breach as a reasonable possibility. No person or organization is immune.
People think retailers and banks are some of the most popular targets. However, hackers target many people and organizations, such as schools, hospitals, and libraries. According to one study, the kinds of information hackers take include social security and driver’s license numbers, email addresses, financial data, and much more.
According to victims, the main issues caused by compromised information was financial or reputational damage. For example, a criminal might use stolen data to submit a tax return or apply for a credit card in someone else’s name. Researchers concluded that more than 70% of the breached data contained details that a person could use to carry out financial fraud or identity theft.
Unfortunately, data breaches are becoming more frequent. In 2017, there were more than 1.6 billion data breaches, up nearly 600 million since the previous year. These events affected more than 197 million records.
Getting serious about data breach prevention requires an all-encompassing effort focusing on network security, access control, malware defenses, and more. Indeed, at the company level, enterprises must focus on how breaches affect the bottom line. They also must be particularly mindful of how stolen data causes financial fraud for employees or customers.
Cybersecurity and Fraud — An Easily Identifiable Link
Excellent cybersecurity makes financial fraud less problematic. However, positive change is not always straightforward. Indeed, improvements should never occur with excessive haste or a lack of forethought.
Once people see cybersecurity as a financial fraud preventative, they’ll be less at risk of becoming victims.