Fraud trends for retail industry

July 11, 2022
by Vinicius Malta

All over the world, lending is experiencing an unprecedented boom, fueled by low-interest rates and changing habits. Companies have been lending more and more due to ever increasing demands and needs of both consumers and businesses. This current phase of the post-covid recovery has exacerbated the demand and need for borrowing. The flip side of the coin is that the proliferation of B2B and B2C credit is a ready-made meal for fraudsters, who are quick to exploit any loophole. Let’s explore some of the current trends here.

Fraud landscape in the United Kingdom and Europe

B2B and B2C credit development is a godsend for fraudsters, who quickly pounce on the slightest opportunity to make a quick buck. The ASF (Association française des sociétés financières) found approximately 43 M€ in fraud for fake brokers alone between 2018 and 2020, which illustrates the gravity of the crisis!

The amount is much higher considering synthetic identity, mule fraud, and others. In the United Kingdom, Cifas warns of a rise in identity fraud as cases recorded on the national fraud database increased by 11% in the first six months of 2021 - a similar pattern to that seen after the 2008 financial crisis.  

Furthermore, according to an Italian institution, Crif, more than 11,200 identity theft and credit fraud cases were recently detected in the Italian market, an alarming figure of 125 M€ in losses. It seems that this is an underestimated problem in France, as the figures in Italy are much higher than in France. Therefore, based on industry estimates, the risk to financial institutions is higher than the figures mentioned, most likely over 400 M€ per year over Europe, which is colossal damage for lending companies.

Potential risk for companies

Fraud is increasing all over Europe, in innovative ways. Companies need to be alert to the increasing number of fraudsters posing as genuine consumers and trying to buy products and services using stolen data.  

« For those specialized in the financing, it is now a race to make the customer journey as agile as possible while personalizing the relationship. The challenge in the digital age is to capture the customer, place him in a sales channel, and propose an offer that meets his needs. In particular, the first differentiator between financing players is the ability to complete the proposal at the point of sale, simultaneously as the act of purchase. »  

Anis Chakroun - President, Team Will Consulting    

To combat fraud efficiently with a fast ROI, institutions are investing in ML-based solutions for fast and efficient fraud detection and prevention. Machine learning-based solutions generate 10 to 20 times fewer false positives than simple rules. Reliable, efficient and robust, they do not require additional staff to run. Carrefour Banque, one of the largest lending institutions in Europe, experienced the positive results of Bleckwen’s solution in less than three months of use:  

  • Fraud attempts decreased by 30%, resulting in 75% fewer fraud losses;
  • The customer experience is more fluid as loan applications are processed faster.

Did you know that 88% of artificial intelligence initiatives in companies don’t land production?

Bleckwen’s anti-fraud scoring solution recovers up to 80% of the residual fraud that’s still slipping through your current defenses.

Read more about the complexities of building a machine learning anti-fraud solution from scratch.

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