The financial landscape has been continuously evolving at an accelerating pace together with the increased globalization, interconnectedness, technological enhancements and digital solutions. This rapidly-developing trend brought about a rise in the new methods to exploit the system which helped financial criminals to find new ways to commit fraud and other financial crimes. Therefore, industry stakeholders and professionals need to adapt themselves into the new and ever-changing landscape to ensure employing effective fraud detection and prevention activities.

In 2024, in line with the emerging technologies and developments, the fraud trends are shaped around the factors such as artificial intelligence (AI), cryptocurrencies, digital ID and new digital payment methods.

 1. Deepfakes and Scams Increased with Deep Learning AI Models

In 2022, ChatGPT entered into our lives as a developed and easy-to-access version of generative artificial intelligence (AI) technology that allows users to create high-quality video, image, audio or text content. Fraudsters seized this opportunity to generate deepfakes with deep learning AI models and use them for ID fraud and other kinds of scams. As the technology continues to enhance, the areas and volume of misuse of it by the criminals will likely increase affecting the financial industry negatively.

2. Reawakening of Cryptocurrency and Digital Asset Fraud

With an upwards trend in the cryptocurrency industry in 2024, the crimes and frauds involving these digital assets have started to revitalize as well. It is expected that crimes including digital wallet takeovers, investment hacks and scams, and victimization of decentralized finance (DeFi) firms will be the focus of the criminals again. It is essential for the users to take extra precautions to protect their digital asset accounts and transactions by adopting safety methods like multifactor authentication and not duplicating passwords for different accounts.

3. AI Service Providers Involved in Fraud

The fast-spreading AI trend caused some financial pressures due to the fact that important technology and AI companies started to look for alternative ways to attract new investors and they came up with fraudulent accounting solutions. This action might have a bad influence on the financial industry both in terms of ethically and financially. The trust in the technology companies adopting the new enhancements such as AI in a proper and virtuous way can be broken and it would negatively affect the public opinion. It is essential to apply more detailed due diligence and auditing procedures for the AI service providers so that they will not go to these lengths to gain financial superiority.

 4. Stricter Fraud Detection and Prevention Focused Obligations and Regulations

In line with the new fraud methods committed by the criminals with the misuse of new technologies, the related regulations and obligations have been updated accordingly. The safety standards of some organizations are altered in a way that the responsibilities of the auditors are improved and increased to be able to monitor and discover any risky and fraudulent activity in a customer’s financial activities.

 5. Higher Automation Helping Criminals

Another improvement of technology, automation, helps fraudsters to achieve criminal tasks that would normally need human intervention via using specific softwares and go unnoticed while doing so. They can exploit the user accounts and with automation systems the volume of this fraudulent act might increase up to a greater extent.

 6. Account Takeover (ATO)

As a form of identity fraud or theft, account takeover (ATO) is another trend that criminals tend to use frequently in 2024 by achieving illegal access to a user’s or a company’s private information and financial accounts. To obtain credentials, criminals commonly use phishing and malware methods or simply purchase them from the dark web. ATO attacks can be automated as well and there are many organizations that are not well-protected enough to prevent these attacks, therefore they might end up with bigger criminal results such as money laundering, bank account takeovers or reselling important personal information.

7. Emerging Digital Payments and Methods

Emerging digital payment solutions and methods including new platforms and cryptocurrencies have increased the efficiency and pace in the financial industry by enabling individuals and businesses to transfer funds online and in real-time or in a very short period of time in comparison to traditional methods. However, these new methods are also more prone to the dangers of criminal abuse as the fraudsters could easily find ways to steal the credentials for ID theft and fraud. Digital assets allow users to make transactions totally anonymous which provides the criminals a suitable background to work on their illegal deeds.

 8. Discrepancy Between Fraud Risk and Customer Satisfaction

Businesses that provide the service of online shopping are struggling in balancing the risk management against fraud and seamless customer experience because they contract with each other in practice. If the protection against criminal activities are in place and strong, it means the customers may experience some frictions in the checkout step of an online shopping process. This discrepancy is more problematic if there is more than one channel including mobile, web and point of sale (POS). Alternative verification solutions are being looked for by the traders and businesses so that they can achieve the balance between minimizing risks and ensuring customer satisfaction.

9. Synthetic Identity Fraud as the Most Common Form of Fraud

Synthetic identity fraud is a form of fraud that is commonly used by criminals to form new fake identities by bringing together some personal data of an individual and also mix them with fictitious identifiers. It is one of the most common and fast-growing financial crimes threatening businesses and individuals across various industries.

10. Increasing Cost of Fraud

The global cost of fraud is estimated to reach $5.4 trillion which comprises costs of fraud losses, fraud detection and prevention tools and consumer satisfaction efforts. As the main reason for this incrementality, the rise of using online and digital services is under consideration. The more people prefer to use online and mobile platforms for shopping, the more fraudsters follow this trend and find ways to exploit them which results in a rise in the cost of fraud and efforts to fight against it.

Tuncay Çoruh, Product Development Director