The growth of technology in recent years has paved the way for the rise of the digital world across industries. Modern tools made it possible to automate and streamline business-critical tasks that will help companies thrive in the years to come. It is also easier for enterprises to communicate with their clients, especially after the arrival of the COVID-19 pandemic.
However, as businesses continue to store a large amount of sensitive data on their servers, the risks of fraud also increase. Organizations have always been keen on their cybersecurity efforts, but fraudsters still find a way to get through the strict digital protection. The innovations in technology have forced fraudsters to evolve their mechanisms which can now easily penetrate traditional online security processes.
Companies should look out for some kinds of attacks to properly establish security against bad actors.
- SIM Swapping – Here, swindlers will contact a phone company and pretend that they are the mobile phone owner. Their goal is to make the representative that they are talking with that they will need to activate a new SIM card on an account. The hackers will then use the one-time password (OTP) to access the account.
- Malicious Accessibility – In this kind of attack, the criminals will exploit vulnerable software or firmware before any fraud prevention measure is placed to protect it. Malware is sent to a website or app that will make the attack more likely to succeed.
- Phishing – Probably the oldest cyberattack out there, phishing is still very effective against traditional online security methods. Fraudsters will send emails or texts to thousands of people that ask them to enter their credentials on a fake website.
The Implementation of PSD2
The rising cases of fraud in critical business types like payments and e-commerce have forced many government boards to reassess existing legislation on cybersecurity. In Europe, the European Union amended the first payments service directive (PSD) to keep up with the evolution of fraud schemes.
The groundwork for PSD2 started in 2013 and was fully implemented on all members of the European Union (EU) in December 2020. This is the EU’s attempt to boost the competition in payment services across nations and protect consumers from malicious attacks. And one of the requirements under PSD2 is the implementation of strong customer authentication (SCA) guidelines.
Challenges in SCA Implementation
The full implementation of PSD2 started last December 31, 2020, and numerous merchants are having difficulties in employing the requirements under the SCA. Having a robust cybersecurity measure became a vital part of effective business operations. However, organizations are having difficulty coping with the high costs and long implementation cycles that authorities expect under PSD2. This resulted in high abandonment rates across Europe.
Vulnerabilities of the SCA
Although the rules under SCA are strong enough to fend off bad actors, they can still be vulnerable if not implemented properly. Swindlers nowadays use a combination of social engineering and tech-savvy techniques that can exploit the fraud prevention measures of the MFA requirements. Companies and third-party providers need to know how the standard social engineering system work to help them adequately carry out their security campaigns.
Commonly known as phishing, criminals use this type of attack by making their targets believe that they are a trusted institution. They will send mass spoofed emails and texts that will ask the victims to open a document or log in to a fake website. Once the clients take the bait, bad actors will store their credentials in the hackers’ private servers, which the fraudsters can use to take over their accounts.
Strong Fraud Prevention Measures
Knowledge-based credentials are the most targeted information for fraud and are also considered the weakest protection against modern cyberattack methods. A combination of device authentication and biometrics provides more robust and real-time prevention against ceaseless attacks from hackers.
The SCA regulations help the payment companies increase the protection of the customer’s digital wallets. SCA comprises three elements: something the customer knows like passwords, something they are, such as fingerprints, and something they have, like a mobile device or security key. These three elements are designed to be independent of each other, ensuring a high level of protection should one of the elements get lost.
Among the three elements, biometrics and hardware provide the highest level of security as passwords are already vulnerable to any attack. LoginID’s FIDO2 passwordless authentication can provide enterprises with effective fraud prevention solutions while abiding with the standards set by PSD2. In addition, they can also provide a digital signature API that can collect virtual signatures for transactions.
As the world continues its journey towards a passwordless society, their product leads the charge into a more secure, private authentication for the future – LoginID. Check this article to learn more about how LoginID can help improve a company’s fraud prevention.
