“Fraudsters are better funded (flush from defrauding governments over pandemic relief), bolder, and more talented than ever. While no payment platform can claim to be 100 secure, PayPal spends millions on digital security measures to protect its users from SSL data encryption to stop hackers from intercepting payments to fraud monitoring and security keys (their version of two-factor authentication). It’s the opposite!” But the criminals are getting smarter and more powerful. Tommy Nicholas, cofounder and CEO of Alloy, whose software helps fintechs prevent fraud and comply with “know-your-customer” regulations, said in an email that “fraud is really widespread right now, really bad, and getting worse.” He added that fintechs and banks “aren't getting worse at fraud prevention or looser in their stances. The continued acceleration of fintech fraud is also surprising some experts. “They’re going to all kinds of fintechs and attacking their account-openings processes,” she adds. “It’s related directly to the identity theft and synthetic fraud that we saw during the pandemic.” She says that bad actors are weaponizing the personal information that they’ve stolen in data breaches and using bots to launch attacks. “What we’re seeing at PayPal is a systemic issue,” says Mary Ann Miller, a vice president at identity and fraud company Prove. No matter whether the transaction is from a bank account or e-wallet, PayPals end-to-end encryption never lets any third parties see your payment information. “I think every fintech should look at accounts that signed up with incentives but never used the account again.” “How much of the growth in some of these fintech portfolios could be fueled by these bots that are creating accounts just for collecting the incentive?” McKenna says. Its latest fraud challenges and admission that 4.5 million accounts were fake begs the question of how other fintechs are being affected.
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