As consumers move increasingly online due to the restrictions imposed by COVID-19 lockdowns and our inability to go about our daily lives as we might once have done, scams and fraud are becoming a serious concern to businesses and individuals alike. Recent research by Callsign, a digital identity protection and security company, has revealed that 66% of people in the UAE have been targeted by scams in recent years and the phenomenon is on the rise. Here, ITP.net talks to Callsign’s Managing Director, Middle East and North Africa, Saeed Ahmad, about the threat scammers pose to individuals and businesses alike.
A widespread problem
Online delivery models for services and private businesses were on the rise well before 2020, however, the COVID-19 pandemic sped the rate at which consumers migrated various elements of their lives online. As the virus gained traction across the world, the volume of online transactions soared and so did scams. “No industry is immune from fraud or attempted fraud, with financial gain often being the primary driver. Our research revealed 66% of people in the UAE have received messages from scammers masquerading as their bank. E-commerce and retail are, unsurprisingly, not far behind with 50% of UAE customers receiving a scam message purporting to be from retailers,” says Ahmad.
Multiple channels
Scammers use a wide range of channels to target victims, many of which are used by legitimate businesses to contact their customers or clients. According to Ahmad, UAE residents are more likely to receive an email from a scammer than they are from a relative, indicating that the problem is widespread. “The use of SMS is on the rise due to the reinvention of the one-time password (OTPs) which organisations use as authentication methods,” he says.
One need only consider the contents of your email spam folder to realise the extent of the problem. Between emails, text messages, social media contacts and WhatsApp messages, the average person receives 1,133 fraudulent messages a year, or three a day, according to the Callsign report. “A third (32%) of UAE consumers surveyed said they have received scam messages via SMS in the last year, a channel regularly used by banks and retailers to communicate with customers,” explains Ahmad. Scams can lead consumers to face severe financial losses, embarrassment and humiliation, leading many (41%) to never report the crime. The end result is that angry customers direct much of their ire towards the impersonated company.
A loss of faith
Around half (49.8%) of regional consumers reported losing trust in organisations that are associated, however loosely, with a scam. “Almost one-fifth of consumers in the region who have been scammed stopped doing business with the company named in the scam,” says Ahmad. The cost can, therefore, be significant. Trust is at the core of consumer relationships and it is vital for companies to regain Digital Trust among their customers.
“For trust to be re-established, consumers need to have confidence in the technology and processes to interact in the digital world, and if all it takes a single text message to break a customer’s trust in a business, then it’s clear that Digital Trust needs fixing,” says Ahmad. But how can businesses re-establish trust?
Security firms have long hailed the necessity of a multi-layered defence against fraud. Placing numerous barriers in the face of fraudsters is an effective way to ward off attack. “The idea is that if the threat manages to get through one of the barriers, another one will stop it from going any further,” says Ahmad. More importantly, the key is education. Consumers must be taught to recognise what fraud and scams look like.
Friction
Alongside education is the concept of ‘friction’. Friction refers to the placing of a series of checks that require input between the consumer and any transaction. Each step that the consumer takes gives them time to consider if they might be involved in a scam. Part of this is the issuing of fraud warns that cannot be missed or ignored and that are provided at crucial points in the transaction’s process. “Since generic advice is frequently disregarded, it’s critical that businesses provide clear and precise reasons why they shouldn’t proceed with a particular action. Businesses should keep in mind that the appearance of a warning is just as important as the language,” said Ahmad.
One other means of defence is the detection of scams when they occur. Dynamic intervention software can scan a device for malware or other risks before a problem occurs. This, in theory, would allow companies to discover threats and to send out personalized warnings to at-risk clients.
Trust is vital
Above all, Digital Trust is of utmost importance. According to Ahmad, organisations need to re-evaluate the technology they use to verify, authenticate and then authorise their genuine customers throughout their online journeys, not just at account creation or login. Companies must also re-evaluate the channels they use to communicate with customers. “If fraudsters are monopolising open channels such as SMS and email, then these channels might no longer be reliable to authenticate identity. Additionally, companies need to recognise the need to fix digital identity and re-establish digital trust,” he says.
ITP.net recently spoke to a group of industry experts about the rise of online fraud.
