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North America Regtech Spotlight

Digital Fraud in the Age of the Pandemic

The world was hit by a global pandemic in 2020 which completely disrupted every working sector and the lives of everyone involved. The public were forced to stay at home as countries entered lockdown in an attempt to stop the spread of the virus. While some companies were able to benefit from the increased need for digitisation, many fraudsters saw this as an opportunity to expose more people who now felt vulnerable as a result of Covid.

Fraud linked to the pandemic has cost Americans $382million, according to the Federal Trade Commission (FTC). The Consumer Financial Protection Bureau, a federal agency that polices financial wrongdoing impacting consumers, fielded 542,300 complaints in 2020, a 54% increase over 2019. More than 3,000 complaints mentioning the pandemic’s keywords were submitted nearly every month starting in April 2020.

The types of fraud

Identity theft has also been a frequent problem relative to unemployment benefits collected during the pandemic. Around 60,000 people reported identity theft to the FTC since 2019. The US Labor Department launched a website for Americans whose personal data was stolen and used to claim fraudulent unemployment benefits.

It was not only the general public who were affected by the increase in fraud. Account takeovers (ATO) were the weapon of choice for fraudsters attacking e-commerce merchants, with ATO rates for physical e-commerce businesses jumping 378% since the start of the Covid-19 pandemic, according to Sift.

Feedzai also published a report on fraud throughout the pandemic. In Q2 2020, during the height of global lockdowns, demand for books and streaming services such as music and movies increased. Demand remained strong in the APAC region, but NA and EU eventually returned to pre-pandemic baseline levels. The story around fraud is quite different, at least for NA and EU. In these regions, attempted fraud attacks increased a whopping 178% since January 2020.

Feedzai found that When it came to transfers fraud, criminals were more drawn to the following five fraud schemes than to all others:

  • Impersonation Scams – 23%
  • Purchase Scams – 22%
  • Account Takeover Scams – 22%
  • Investment Scams – 6%
  • Romance Scams – 3%

Solution Case Studies

Despite fraudsters increasing their technical abilities, companies dedicated to protecting the public from these scams were also able to digitise and improve their security measures. Here are three cases studies of regtechs in the NA region that found success and what they are doing to combat fraud:


Chainalysis is a blockchain analysis company. Chainalysis provides data, software, services, and research to government agencies, exchanges, financial institutions, and insurance and cybersecurity companies in over 50 countries. Its data platform powers investigation, compliance, and risk management tools that are used to grow consumer access to cryptocurrency safely.

They announced a partnership with Bluestone Analytics, allowing for two-way integration between their platforms, delivering expanded visibility into dark web cryptocurrency transactions.

“Cryptocurrency is a vital piece to the way criminals operate on the deep and dark web. Our partnership with Bluestone Analytics will empower federal agencies with more holistic insights into these covert networks,” said Chris Manouse, Vice President of Public Sector at Chainalysis. “We’re excited to provide these new capabilities to Bluestone Analytics and continue our ongoing fight to make cryptocurrency safe and trusted to the public.”


Forter is a software as a service (SaaS) company that provides fraud prevention technology for online retailers and marketplaces. Forter have four branches of protection: payment protection, account protection, policy abuse protection and smart routing: approvals are maximised by determining the best payment routing decision in real-time.

Forter released its ninth Fraud Attack Index, an in-depth insight into the impact of the pandemic on online buyer behaviour and e-commerce fraud in October 2020. The study found a 30% increase in new account e-commerce transactions which now account for five times more than pre-Covid but warns legacy anti-fraud systems might generate high levels of false decline.

However, in travel, although transactions were down 97% in the first six months of 2020, fraud attack rates in more than doubled, with hotel fraud attacks rising 139% and airline fraud attacks increasing 144%. The report says ATO and policy abuse such as returns abuse, promotion abuse, and reseller abuse are set to surge during the holiday season.

When asked about how companies and merchants were prepared for the adjustments that were going to have to be made following the pandemic, Michael Reitblat, chief executive and co-founder of Forter, said: “To fully realise this new revenue potential, merchants need more accurate fraud prevention that can distinguish between these valuable new customers and fraudsters. Merchants can have a false decline rate between 5-7x higher for new customers – typical of legacy systems that do not have sufficient data on new account holders.”


Behaviosec use behavioural biometrics software to predict and prevent problems caused by digital fraud. The company’s continuous digital authentications ensure that fraudulent practices — such as account takeover, checkout fraud, and new account fraud —are dealt with before they become serious issues.

When speaking about the gravity of fraud in 2020 and 2021, compared to years past, a Behaviosec blog post by Shane Shook said, “Throughout my 20 years conducting cybercrime investigations, I have reviewed and responded to some of the world’s most notorious breaches that have succeeded by exploiting new technologies and business change. As we enter 2021, the Covid-19 pandemic has opened a large window into both for bad actors – we’re witnessing the largest digital transformation to date due to a global, dramatically increased need for remote access to commerce, healthcare services, and work collaboration that underpins our fragile social-economic fabric.

But are we really under more attack now than in 2019? The resounding answer is ‘Yes.’ And data collected across 2020 illustrates this starkly. According to the September 2020 Association of Certified Fraud Examiners (ACFE) Benchmark Report, Fraud in the Wake of COVID-19, 77% of respondents observed an increase in overall fraud, with over 30% perceiving a significant jump. The report revealed that this dramatic increase in both attacks and perception was already underway between May and August 2020 with increases at 68% and 25% respectively. The ACFE findings also shared that a full 92% of respondents expect to see even more increases over the next year.”


  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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