COSTA MESA, Calif. -

It’s already been a tumultuous beginning to 2021, and Experian doesn’t expect it to settle much on the fraud front.

With the growing threat of fraud fueled by the digital acceleration that took place in 2020, Experian on Monday released its 2021 Future of Fraud Forecast that highlighted what experts believe to be five emerging fraud threats facing businesses.

Experian explained the rapid increase in digital use created a perfect storm for fraudsters to find new ways to steal funds quickly, capitalizing on consumers’ lack of familiarity with digital platforms and the resource constraints faced by many businesses.

In fact, from January 2020 to early January 2021, the Federal Trade Commission discovered that consumers reported more than 275,000 complaints resulting in more than $210 million in COVID-19-related fraud loss.

“Because of this, it’s critical for businesses to anticipate potential new fraud schemes to prevent losses and protect customers,” Experian said.

To help businesses prepare for fraudulent activity this year, Experian compiled its Future of Fraud Forecast to highlight five fraud threats businesses should be aware of this year, including:

1. Putting a face to Frankenstein IDs

Experian pointed out that synthetic identity fraud — when a fraudster uses a combination of real and fake information to create an entirely new identity — is currently the fastest growing type of financial crime. Experts said the progressive uptick in synthetic identity fraud is likely due to multiple factors, including data breaches, dark web data access and the competitive lending landscape.

As methods for fraud detection continue to mature, Experian is expecting fraudsters to use fake faces for biometric verification. These “Frankenstein faces” will use artificial intelligence to combine facial characteristics from different people to form a new identity, creating a challenge for businesses relying on facial recognition technology as a significant part of their fraud prevention strategy.

2. “Too Good to Be True” COVID-19 solutions

With the distribution of vaccines underway and wider availability of rapid COVID-19 testing, Experian is projecting that fraudsters will continue to find opportunities to capitalize on anxious and vulnerable consumers and businesses.

“Everyone needs to be vigilant against fraudsters using the promise of at-home test kits, vaccines and treatments as means for sophisticated phishing attacks, telemarketing fraud and social engineering schemes,” experts said.

3. Stimulus fraud activity: Round No. 2

For Americans suddenly out of work or struggling with the financial fallout from the pandemic, Experian acknowledged last year’s government-issued stimulus funds were a welcome relief, but also an easy target for fraudsters to commit scams.

Experian is thinking that fraudsters will take advantage of additional stimulus funding by using stolen data from consumers to intercept stimulus or unemployment payments.

4. Say hello to constant automated attacks

Once the stimulus fraud attacks run their course, Experian is projecting that hackers will increasingly turn to automated methods. They include script creation — using fraudulent information to automate account creation — as well as credential stuffing — using stolen data from a breach to take over a user’s other accounts.

Experian cautioned that these strategies can make cyberattacks and account takeovers easier and more scalable than ever.

“With billions of records exposed in the U.S. due to data breaches annually, this type of fraud will prosper in 2021 and beyond until the industry moves away from its reliance on usernames and passwords,” experts said.

5. Survival of the fittest for small businesses

As a result of COVID-19, Experian noted that businesses were left with no choice but to quickly shift to digital to meet the needs of consumers, and some were more prepared than others.

In 2020, experts said consumers may have been willing to give businesses time to adjust to the new normal, but in 2021 their expectations will be higher. Experian is predicting businesses with lackluster fraud prevention tools and insufficient online security technology will suffer large financial losses in 2021 and beyond.

Kathleen Peters, chief innovation officer at Experian Decision Analytics in North America, elaborated about those five predictions in a news release.

“Fraud is complex and our predictions show that businesses and consumers need to be vigilant in 2021 as fraudsters become more sophisticated,” Peters said. “As a trusted industry leader in identity verification and fraud prevention, Experian is committed to helping businesses anticipate future fraud risks, protect consumers and adapt on the road to recovery ahead.”

Experian’s suite of automated fraud prevention and detection tools are designed to allow businesses across industries to harness the power of data and advanced analytics with the flexibility to adapt to future fraud schemes and manage resource constraints.

Last year, Experian said its fraud prevention solutions helped clients save $10 billion in fraud losses globally.

To learn more about Experian’s fraud prevention solutions, visit https://www.experian.com/fraud-resource-center. To download the Future of Fraud Forecast, visit https://www.experian.com/future-of-fraud-forecast.