Cryptocurrency Cybersecurity Insights North America Paytech

Cybercriminals Double Down Attacks on Digital Wallets, Cryptocurrency Exchanges and BNPL Companies

Sift’s Digital Trust and Safety Index reveals rising fraud across fintech in Q1 as cybercriminals double down attacks on digital wallets, cryptocurrency exchanges and buy now pay later (BNPL) companies.

Data from Sift’s Q1 2022 Digital Trust and Safety Index details the increasingly sophisticated – and often automated – tactics cybercriminals leverage to commit payment fraud.

Correlated from a network of over 34,000 sites and apps, and expressed through the views of over 1,000 of the payment fraud solution provider’s consumers, the index reveals that the payment fraud attack rate across fintech swelled by 70 per cent last year.

The payment fraud attack rate is the rate of fraudulent transactions blocked by Sift out of total transactions, and it had the highest increase across any vertical recorded on Sift’s network in 2021.

The increase in payment fraud also correlated with massive 121 per cent growth in fintech transaction volumes on Sift’s network year-over-year (YOY). But where there is popularity, there is crime.

Sift’s analysis points to alternative payments as being the prime target.

Digital wallet payment fraud rose 200 per cent, payments service providers by 169 per cent and cryptocurrency exchanges by 140 per cent.

Sift has specifically seen these abuse tactics aimed at BNPL services, which experienced a 54 per cent YOY uptick in fraud attack rates.

There is evidence to suggest the growing threat of BNPL fraud schemes, including a recent example involving the instant messaging service Telegram, when fraudsters were offering unlimited access to BNPL accounts through fake credit card numbers and compromised email addresses.

The prevalence of this alone highlights the widening array of methods actors in the Fraud Economy use to target the fintech sector.

The Hidden Brand Impact of Payment Fraud

Along with network-wide growth in average daily transaction volumes across every industry, Sift saw an overall 23 per cent surge in blocked payment fraud attacks in 2021.

Concurrently, nearly half of survey respondents report that they’ve fallen victim to payment abuse over the past one to three years, and 41 per cent of the victims experienced it in the last year alone.

Of those victims, one-third identified financial service sites as the ones that pose the highest risk, which could negatively affect customer trust in the industry.

Jane Lee, Trust and Safety Architect at Sift
Jane Lee

“Many brands fail to realise that the damage of payment fraud goes beyond the initial financial impact,” said Jane Lee, trust and safety architect at Sift. “The vast majority of consumers report abandoning brands after they experience fraud on a business’s website or app, diminishing customer lifetime value and driving up acquisition costs.

“Further, potential customers who see unauthorised charges from a particular company on their bank statements will forever associate that brand with fraud. In order to combat these attacks and grow revenue, businesses should look to adopt a Digital Trust and Safety strategy – one that focuses on preventing fraud while streamlining the experience for their customers.”

Tackling the fraud economy with Sift’s fraud intelligence centre

To help trust and safety teams better understand the intricacies of the Fraud Economy, Sift has launched its Fraud Intelligence Centre. Leveraging data from Sift’s network of 70 billion events per month, the Fraud Intelligence Centre will provide trust and safety professionals with the data, trends and expert analysis they need to fight back against the Fraud Economy.


  • Tyler is a fintech journalist with specific interests in online banking and emerging AI technologies. He began his career writing with a plethora of national and international publications.

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