The Different Types of Online Fraudulent Activities and Their Explanation

Nowadays, more and more companies are becoming victims of fraudulent activities. The reason for that is the increasing tendency of online payments and different subscriptions, plus the advanced technology enabling fraudsters to use new methods to carry out such activities. 

It is especially difficult for those companies that manage their whole operations online, without ever meeting their customers face-to-face, while gaining revenue from payments made in the online sphere. 

Fraudsters find these businesses a particularly great target, as it’s easier for them to carry out fraudulent activities if companies are unaware of detecting and predicting these. 

In this article, we’ll discuss the most common online fraud activities and explain them for better understanding. 

What kind of online fraud activities are there? 

There are many different types of activities that are considered to be fraudulent that online businesses are vulnerable to. 

Credit Card Fraud

Credit card fraud is said to be the most common type of identity theft. There are several subtypes of this fraud. 

• One of them is the most obvious one, where fraudsters find lost cards or steal cards from individuals, and make payments with them. 
• Another one is the so-called no-card-present fraud, where fraudsters find out a specific card detail, such as the account holder’s name, the credit card number, and the expiration date. With that, it is possible to carry out fraudulent activities via mail, phone calls, or online. 
• Account takeover is when after gaining access to personal information, the fraudster contacts the credit card company and pretends to be the account holder. After that, they register a change of address, report the card as stolen, and ask for a new one. 

Subscription Fraud

Subscription fraud is gaining unauthorized access to specific services, without any intention of payment. This also has different subtypes:

• Stolen payment data refers to the event where someone accesses stolen card details and uses them for subscription services. Details can be accessed through data breaches or dark web purchases. 
• Account takeover is when someone gains access to a person’s private account and uses the services as if the account were their own. 
• Free trial abuse is when fraudsters register for service several times to exploit their free trial periods. This can be done through continuously changing IP addresses or signing up with disposable email addresses. 
• Chargeback fraud is another common activity referring to users disputing the charges with the credit card company claiming they never authorized the payment. 
• Bypassing service limits is another kind of subscription fraud, where fraudsters find a loophole or vulnerability and exploit it to gain access to services or features they are not authorized for. 

DOS/DDOS

A DoS attack (denial-of-service) means that someone is overloading someone else’s website to make it inaccessible. A DDoS attack (distributed-denial-of-service) attack means that the DoS attack is done through multiple computers to flood a source. 

If the server is flooded with more TCP or UDP than it can handle, it will clash, and there is a potential to paralyze the whole system.

There are six different types: teardrop attack, flooding attack, IP fragmentation attack, volumetric attack, protocol attack, and application-based attack.

Malware

Malware is any malicious software with files or programs that is used to intentionally harm a server or computer. 

Their purpose is to steal, encrypt, or delete private information, change or take over computers and their functions, and monitor users’ activities. 

The different types of malware include viruses, worms, Trojan horses, spyware, ransomware, backdoor viruses, adware, and keyloggers. 

Business Email Compromise (BEC)

Business email compromise (BEC) is a phishing attack where the fraudster sends an email to a senior executive or budget holder asking for transferring of funds or private information. 

The emails are convincing-looking, requesting unusual payments, containing weird links, or having viruses as attachments. 

It is different from other phishing attacks in that these are targeted to specific individuals or groups of individuals, making it more difficult to detect. 

Conclusion

In conclusion, online fraud is vast and constantly evolving, posing significant risks to businesses, particularly those operating primarily in the digital domain. From credit card and subscription fraud to DoS and DDoS attacks, malware, and BEC, there are many attacks that can potentially harm a business. 

Companies must remain vigilant and informed. Understanding these fraudulent activities is the first step in developing effective strategies to prevent, detect, and respond to these threats.