End of Year Purchases Intensify Concern about Digital Fraud

The last quarter of the year is always highly anticipated by retailers. The biggest movement in shopping starts with Children's Day, followed by Black Friday and Christmas. However, this movement brings a fear to companies: frauds. 

In the last year, 8.9 million Brazilians were victims of some type of fraud. According to a study released by the National Confederation of Shopkeepers (CNDL), 48% are related to transactions or sales made over the internet. 

For the specialist in solutions and fraud prevention, Igor Castroviejo, Country Manager Brazil at 1DataPipe, a consumer insights platform, one of the main tools used by scammers today is AI, mainly to circumvent the security systems of banks and fintechs. “With AI, they have managed to deceive users more easily, which has been causing a high, including reputational, financial institutions”, highlights Castroviejo.  According to Cybersecurity Almanac 2024, cyber attacks should cost US$9.5 trillion to the global economy.

Throughout Latin America, 91% of companies have already undergone a cybersecurity incident, according to a survey by the consultancy EY. In Brazil, in the last year alone, the number of scam victims increased by 70%, according to a data from the Economic and Business Research Center (CEBR), which represents an average loss of R$8.5 million per company.

For Castroviejo, the investment and application of cutting-edge artificial intelligence is the main solution for companies that seek to minimize the risks of fraud and scams. Currently, by combining technology with data analysis, it is possible to identify individuals prone to perform fraudulent activities. There are already software on the market that evaluates the digital footprints of this person, including their online behavior, the IP of their device and also the reliability of their phone and email address”, he explains.

It is possible to see a trend in the use of technology, especially in South America. A survey of the Certified Fraud Investigators Association (ACFE) shows that, worldwide, 18% of professionals in the Combat of Fraud segment already use artificial intelligence and machine learning in their work, with another 46% of executives in the sector who reside in the Latin continent intending to incorporate them in the next two years.

“Through the use of Machine Learning, companies can train their algorithms to identify the default behavior of their users. If the system detects any abnormal operation, such as using it in a different location or buying products outside the profile, you can classify the transaction as suspicious and ask for some confirmation of use for the holder”, explains Igor.

There is a growing trend in the use of technology in South America. According to a survey of the Certified Fraud Investigators Association (ACFE), globally, 18% of professionals in the fight against fraud sector already use artificial intelligence and machine learning in their work, while 46% of Latin American executives plan to incorporate them in the next two years. “With the application of Machine Learning, companies are able to train their algorithms to recognize the typical behaviors of their users. If the system identifies an unusual operation, such as use in a different location or the acquisition of products that do not match the usual profile, it can mark the transaction as suspicious and request a confirmation of use from the holder”, concludes the 1DataPipe Country Manager.