January 2024 – Trustpair shares its annual US Fraud Report. Trends, numbers, insights… This 2024 report sheds light on how US companies are adapting to these threats. Crafted with Cint, this report was created with Baptiste Collot, Trustpair CEO, and Lee-Ann Perkins, Assistant Treasurer, and NACHA advisory board member. Download it right now!
Fraud is surging in US companies
The landscape of payment fraud in 2023 has presented an unprecedented challenge for companies across the United States. A staggering 96% of businesses faced at least one fraud attempt last year, marking a worrying 71% increase from 2022. This surge points to an alarming trend: the growing sophistication and frequency of cyber fraud.
83% of US businesses were targeted by cyber fraud in the last 12 months. Cyber frauds are highly sophisticated fraud schemes that use cutting-edge technology – AI, machine learning, and automation – carried out by specialized and highly organized fraudsters. The main types of fraud were wire transfer fraud ( targeted 53% of companies), vendor fraud (47%), and CEO fraud (44%). The “popularity” of wire transfer fraud isn’t surprising as it’s often perpetrated through cyber-attacks.
“ I am not surprised fraud is rising. We’re seeing it, we’re hearing about it, we’re experiencing it in our corporate lives, some of us in our personal lives. We benefit from technological advancements but so do the fraud actors! They’re using technology for their own benefits.” Lee-Ann Perkins, NACHA Advisory Board Member
Financial and reputational consequences are dire
These aren’t just random and sporadic attacks. An overwhelming majority of targeted organizations, a full 94%, were hit multiple times, with 21% suffering over ten incidents. This relentless assault has left a deep financial impact. More than a third (36%) of these companies faced losses exceeding a million dollars due to successful fraud attempts, and a quarter lost more than $5 million. On average, businesses lost $100,000 per fraud event in 2023: this is much higher than in 2022.
However, financial losses aren’t the only consequences, far from it. 51% of companies also indicate damaged reputations with customers as a consequence, 50% damaged reputation with investors and 45% tarnished relationships with vendors. Fraud can definitely impact businesses on the long run and slow down their activity and sales.
“You can lose some money to fraud, or get it back in some cases. But the damaged reputation with customers, investors, or suppliers and the potential effects on your business down the road is what’s most dangerous. Building up that trust is hard.”Lee-Ann Perkins, NACHA Advisory Board Member
Attacks are more dangerous
The nature of fraud is also evolving, becoming intricately linked with cybersecurity. 83% of companies were targeted by cyber fraud in 2023. Modern fraudsters are employing sophisticated tactics, leveraging the advancements in technology – AI, automation – to their advantage. They operate in the shadows and their moves are often detected too late for businesses to recover their losses. The result is a more complex fraud risk, one that is harder to detect and counteract.
Thankfully, some companies have embraced the risk and are raising budgets and defenses. However, there’s still a notable gap in the adoption of advanced fraud
prevention strategies: only 28% of businesses use fraud prevention software for example. For businesses, 2024 will be the year to adapt and react.
With these new cyber risks, companies need to double their defenses: first against cyber-attackers with firewalls and other cyber-security protections then against the financial effects of fraud with automated fraud prevention tools like Trustpair. These tools act as a blocker to suspicious transactions and unusual data change or activity. If cyberattackers pass the first cybersecurity barrier, the financial effects of their attacks are stopped by fraud prevention software.
“We need to take the robot out of the human and let tools do the manual and repetitive tasks we’ve been doing so far. Humans are the weakest link in any process. It only takes one person not paying attention, not following procedures for fraud to happen.”Lee-Ann Perkins, NACHA Advisory Board Member