Feedzai‘s Senior Vice President of Product Pedro Barata describes the pandemic era as “the perfect storm for payments fraud.” He describes to PYMNTS how Feedzai has helped its customers adjust and implement effective defenses against financial crime and react appropriately in a digital age.
The following is an excerpt from What Did You Change?, contributed by Feedzai‘s Senior Vice President of Product Pedro Barata.
When it comes to 2020 (and beyond?), truer words have never been spoken in the financial crime domain. With confusion regarding pandemic response, trillions of government-provided financial assistance dollars flowing out of coffers, and unclear direction on the distribution process, it was the perfect storm for payments fraud.
While the adoption of mobile banking technology has been on the rise over recent years — reaching majority preference in U.K. consumers last year (CIFA), as an example — the unexpected COVID impact has been a once-in-a-lifetime occurrence that forced a shift to a digitally-centric world. We’ve seen a surge in online/mobile adoption; at the start of COVID (April), mobile banking registrations jumped some 200 percent, and overall mobile traffic rose 85 percent. With these new behaviors come new vulnerabilities, and the fraudulent actors that search for them.
The first shocking heists that came to light due to COVID were weaknesses at the individual state level, related to unemployment benefits. Fraud related to unemployment benefits has skyrocketed during this time. It’s a multipart problem, where the states have poor controls related to online and mobile activity and disbursement monitoring. U.S. financial institutions (FIs) are then unwittingly part of the problem, as unemployment benefits enter the financial ecosystem through mule accounts and first-party bad actors. We have also seen multiple cases of SBA and PPP loan abuse, with individuals creating synthetic company and employee identities to steal benefits distributed under the US HEROES legislation. In the rush to distribute funds to those most affected, many FI clients found themselves financing greed instead.
Feedzai helped our customers adjust to these interesting times in a myriad of different ways, each contributing to an additional layer of financial crime defense. One particular area of focus is to help our clients better understand the digital- based identity or mask that their customer presents for the transaction. By providing the ability to evaluate hyper-granular behavioral changes throughout the online or mobile session, we allow our clients to react appropriately in a digital age. In addition, we provide powerful visual analysis tools such as Genome to display networked criminal activity within our clients’ data.