• Latest
Types of Buy Now Pay Later Fraud

Types of Buy Now Pay Later Fraud

April 11, 2022
Policy Abuse Fraud: What Is It and How to Protect Against It

nSure.ai Delivers Growth to Digital Commerce Leaders and Boosts YoY Revenue by 280%

January 25, 2023
Fraugster and Refurbed partner to increase approval rates and reduce fraud for refurbished electronics marketplace

Sift Appoints Former Ping Identity COO Kris Nagel as CEO

January 20, 2023
Veridos Announces Innovatrics as Strategic Partner for Advanced DNA ID Verification

Veridos Announces Innovatrics as Strategic Partner for Advanced DNA ID Verification

January 19, 2023
New Podcast Episode: Walls of Thieving Cellphones with Nethone

New Podcast: How to Stop Return Policy Abuse Fraud

January 10, 2023
How to Write a Strong Chargeback Policy: Tips to Help You Protect Your Business

How to Write a Strong Chargeback Policy: Tips to Help You Protect Your Business

January 6, 2023

Anti-money laundering: Frequently Asked Questions

January 3, 2023
Card Not Present Fraud: How Companies Lose Nearly $10 Billion Per Year

Chargeback Fraud: How to Prevent it and What to Do if it Happens

January 1, 2023
Tailgating cybersecurity threat prevention

Tailgating cybersecurity threat prevention

December 30, 2022
AuthenticID Announces Partnership with Milk & Honey Labs

Axerve Partners With ACI Worldwide to Help eCommerce Businesses Grow Revenues in the U.K.

December 27, 2022
Best Risk Management Software

Best Risk Management Software

December 26, 2022
New Podcast Episode: Walls of Thieving Cellphones with Nethone

New Podcast: Know Your Customer. Or else.

December 20, 2022
Account Takeovers

Account Takeovers

December 11, 2022
  • Contribute
  • Contact Us
  • About
  • Join Us
  • Advertise
Saturday, January 28, 2023
Merchant Fraud Journal
  • Home
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Resources
    • Recorded Webinars
    • Podcasts
    • Vendor Directory
    • eCommerce Fraud Reports
    • Training and Certifications
    • Jobs Board
    • Associations and Non-Profits
  • News
No Result
View All Result
  • Home
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Resources
    • Recorded Webinars
    • Podcasts
    • Vendor Directory
    • eCommerce Fraud Reports
    • Training and Certifications
    • Jobs Board
    • Associations and Non-Profits
  • News
No Result
View All Result
Merchant Fraud Journal
No Result
View All Result

Types of Buy Now Pay Later Fraud

by Bradley
April 11, 2022
in Articles, Fraud Prevention
Types of Buy Now Pay Later Fraud

Buy now pay later services are becoming increasingly popular, especially as so much commerce has moved online during the pandemic. But with new forms of commerce comes fraud. Buy now pay later fraud (BNPL) is like “teaching an old dog new tricks”: the five types of fraud discussed here have been used in other markets for years and exploit weaknesses in the BNPL model.

Synthetic ID

What is it? Synthetic ID fraud is when a fraudster uses a combination of real and fake personal information to create an identity and commit fraud. This presents a major problem to merchants offering buy now pay later, who will be unable to recover funds from a nonexistent person.

Why is it hard to detect? Synthetic ID fraud is hard to detect because many countries, especially the U.S., use static forms of personally identifiable information (PII) like Social Security numbers (SSN) to establish identity that are often exposed in data breaches. And one of the most perfidious aspects of the synthetic ID is fraudsters’ ability to use these synthetic IDs to build real credit and defraud more merchants or on greater-value purchases.

What’s an example? The most common example of synthetic ID fraud is the “Frankenstein ID.” As the name suggests, the identity being used is a monstrous combination of different parts of different identities to come alive. A fraudster might combine a SSN and address they’ve stolen with a made-up name and birth date to create their synthetic ID.

Account Takeover

What is it? As the name suggests, account takeover (ATO) is when a legitimate buyer’s identity or account is used by a bad actor to commit fraud. Existing accounts are targeted through techniques like SIM card cloning, credential stuffing, and phishing. It’s the cyber equivalent of a break-and-enter theft.

Why is it hard to detect? ATO fraud is tough to detect because the fraudster capitalizes on the victim’s history of legitimate transactions and good-faith purchases. The merchant may not catch transactions as fraudulent, often leaving exposure up to the person whose information has been compromised. For merchants offering buy now pay later, this can mean losses on multiple or high-value purchases when the victim initiates a chargeback.

What’s an example? ATO is one of the most common types of fraud: a legitimate-looking email arrives and the target clicks a link or replies to an email, essentially opening the door for the cybercriminal. A recent scam is an email from a fraudster mimicking a receipt for subscription to antivirus software. The unwitting victim could see this and, fearing a charge for something they didn’t purchase, click the link that allows a cybercriminal to take over their account.

Family Fraud

What is it? Family fraud combines cybercrime with relational abuse, as someone steals the identity of someone close to them to make a purchase. Victims of family fraud are very often parents of minor children and the elderly.

Why is it hard to detect? Like ATO, family fraud is very hard to detect because the fraud is cloaked by the victim’s history of legitimate purchases. Also like ATO, it’s often up to the victim to notice the fraudulent charges.

What’s an example? Family fraud has been occurring for years, sometimes occurring by accident. A recent event involved a four-year-old child ordering $2,600 worth of SpongeBob SquarePants popsicles on his mother’s Amazon account.

New Credit Line Abuse

What is it? For companies that offer a buy now pay later option, copies of proofs of identity like a state ID card or a bill with a current address on it. When a cybercriminal gets a hold of these documents, they are able to create fraudulent accounts in the victim’s name and take advantage of the introductory line of credit often offered as an incentive to legitimate customers.

Why is it hard to detect? The modern consumer tends to abandon overly complex sign-up processes or shopping experiences. Many companies offering buy now pay later services have prioritized an effortless sign-up experience, but without the right defenses in place, this effortlessness opens the door to new line of credit abuse.

What’s an example? A cybercriminal makes a BNPL purchase using documents purchased on the dark web and immediately begins purchasing using the introductory line of credit. By the time the fraud is noticed, the bad actor has already benefited from their crime.

Repayment with Stolen Credit Cards

What is it? This is a fraud-on-fraud situation. A cybercriminal uses buy now pay later to make a purchase, which they then pay off using a stolen credit card. A crime is used to pay the debt of another crime.

Why is it hard to detect? Repayment with stolen credit cards is difficult to detect because of the compounded fraud. Because it’s two different types of fraud targeting two, separate financial institutions (the holder of the stolen card and the merchant offering buy now pay later), the cybercriminal can do a lot of damage in the time it takes the two institutions to realize what’s happening.

What’s an example? Repayment with stolen cards can take the form of any of the aforementioned types of fraud. Perhaps a fraudster makes a purchase via a buy now pay later method of payment with information stolen from a phishing scam and then uses a credit card stolen from an elderly relative to pay off the BNPL bill.

These five types of buy now pay later fraud are on the rise. Companies that offer a BNPL option need to combine fast, easy customer service with a robust behind-the-scenes cybersecurity process to avoid becoming a victim of these schemes.

Tags: BNPL
ShareTweetShareSend
Previous Post

Sift Adding Keyless to Sift Connect App Gallery to Bring Businesses Unmatched Account Security While Reducing User Friction

Next Post

RaidForums Shutdown by the United States Department of Justice

Next Post
RaidForums Shutdown by the United States Department of Justice

RaidForums Shutdown by the United States Department of Justice

Our Latest Reports

2022 Chargeback Consumer Survey Report

Fraud Prevention Tactics that Enable Exceptional Customer Experience

Addressing Payment Fraud and The Customer Experience in 2022

2022 Fraud Trends Report

ATO Fraud In Retail Report

2022 Customer Experience Report

3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue

Digital Trust And Safety Report: Combating the Evolving Complexities of Payment Fraud

On-Demand Webinars

Balancing Customer Experience and Fraud Prevention: What’s the Secret?

Stopping Fraud Across the Customer Lifecycle

Addressing Payment Fraud and the Customer Experience in 2022

 

Get the 2022 Fraud Trends Report

MFJ 2022 Fraud Trends Report

Search Our Site

No Result
View All Result

Our Sponsors

Featured Directory Listings

  • logo
    NoFraud
  • SEON. Fraud Fighters
  • sift logo
    Sift
  • Signifyd
  • Ekata
  • Microsoft Dynamics 365 Fraud Protection
  • PayRetailers
  • Spotrisk

Our Sponsors

Fraud Industry News

Policy Abuse Fraud: What Is It and How to Protect Against It

nSure.ai Delivers Growth to Digital Commerce Leaders and Boosts YoY Revenue by 280%

January 25, 2023
Fraugster and Refurbed partner to increase approval rates and reduce fraud for refurbished electronics marketplace

Sift Appoints Former Ping Identity COO Kris Nagel as CEO

January 20, 2023
Veridos Announces Innovatrics as Strategic Partner for Advanced DNA ID Verification

Veridos Announces Innovatrics as Strategic Partner for Advanced DNA ID Verification

January 19, 2023

Connect With Us

Quick Navigation

  • Home
  • News
  • Join Us
  • About Us
  • Contact Us
  • Advertise
  • Contribute
  • Privacy Policy

The Payments Media Network

Merchant Fraud Journal
Payments Review

Privacy Policy

Our Privacy Policy
Our Terms of Use

Resources

  • Articles
  • eCommerce Fraud Reports
  • eCommerce Fraud Webinars
  • Training and Certifications
  • Jobs Board
  • Associations and Non-Profits
  • Podcasts
  • Vendor Directory

Popular Posts

  • How to File a Claim With FedEx + What To Do If Claim is Denied

    How to File a Claim With FedEx + What To Do If Claim is Denied

    0 shares
    Share 0 Tweet 0
  • Top eCommerce Fraud Prevention Companies

    0 shares
    Share 0 Tweet 0
  • How Does Two-Factor Authentication (2FA) Work?

    0 shares
    Share 0 Tweet 0
  • How to Fight PayPal Chargeback Fraud

    0 shares
    Share 0 Tweet 0

Featured Vendors

  • NoFraud
  • SEON. Fraud Fighters
  • Sift
  • Signifyd
  • Ekata
  • Microsoft Dynamics 365 Fraud Protection
  • PayRetailers
  • Spotrisk

Download the 2022 Fraud Trends Report

No Result
View All Result
  • About Merchant Fraud Journal
    • Interested in Contributing or Guest Posting to Merchant Fraud Journal?
  • Advertise on Merchant Fraud Journal
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Contact Us
  • Download Addressing Payment Fraud and Customer Experience Report
  • Download Chargebacks Consumer Survey Report 2022
  • Download Evolving Complexities of Payment Fraud Report
  • Download Fraud Prevention Tactics that Enable Exceptional Customer Experiences Report
  • Download the 2020 Chargeback and Representment Report
  • Download the 2020 Merchant Fraud Journal Vendor Guide
  • Download the 2021 Fraud Trends Report
  • Download the 2022 Fraud Trends Report
  • Download the 3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue Report
  • Download the MFJ 2022 Customer Experience Report
  • Download the MFJ ATO in Retail Report
  • Home
  • Job Dashboard
  • Join The Merchant Fraud Journal Community
  • Merchant Fraud Journal Advertising Agreement
  • MFJ Fraud Trends Report Giveaway
  • News
  • Post a Job
  • Privacy Policy
  • Resources
    • 2020 Chargeback Representment Guide for Merchants
    • 2020 Vendor Guide
    • 3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue
    • Addressing Payment Fraud and the Customer Experience in 2022
    • Associations and Non-Profits
    • ATO Fraud In Retail Report
    • Balancing Customer Experience and Fraud Prevention: What’s the Secret?
    • Chargebacks Consumer Survey Report 2022
    • Digital Trust & Safety: Combating the Evolving Complexities of Payment Fraud
    • eCommerce Fraud Reports
    • eCommerce Fraud Webinars
    • Fraud Prevention Tactics that Enable Exceptional Customer Experiences
    • Fraud Prevention Training and Certifications
    • How to Build a Recession Proof Chargeback Prevention Strategy
    • How to Stop Fraud During the 2022 Holiday Season
    • Jobs Board
    • Merchant Fraud Journal’s Fraud Trends 2020 Report
    • Merchant Fraud Journal’s Fraud Trends 2021 Report
    • Merchant Fraud Journal’s Fraud Trends 2022 Report
    • MFJ’s 2022 Customer Experience Report
    • Podcasts
    • Prevent High-Velocity Fraud Attacks During the 2021 Holiday Season
    • Stopping Fraud Across the Customer Lifecycle
    • Vendor Directory
    • Webinar – Addressing Payment Fraud and the Customer Experience in 2022
    • Webinar – Mitigating Fraud and Risk on the ACH Network
    • Win January Chargeback Disputes
  • Subscribed
  • Terms and Conditions

© 2021 Payments Media Solutions Canada Inc.

Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?