Since the pandemic, fraud and scams have surged significantly, with mature markets like Singapore and Hong Kong facing increasingly complex challenges, including authorised push payment fraud and deepfakes.

Stephen Topliss, vice president of fraud and identity at LexisNexis Risk Solutions, says that to address the evolving fraud trends in Southeast Asia organisations must adopt a multi-faceted approach combining cutting-edge technology and cross-industry collaboration to share risk insights.

There are persistent challenges related to fraud. Topliss emphasised the growing prevalence of fraud and scams and the LexisNexis Risk Solutions’ 2024 Cybercrime Report confirms this trend, revealing a 19% year-over-year increase in the global human-initiated digital attack rate in 2024.

Scams become rampant in Southeast Asia

Topliss highlighted authorised push payment fraud as a growing trend in Southeast Asia, where scammers exploit human vulnerabilities to initiate fraudulent transactions.

In countries like Cambodia, Laos and Myanmar, organised criminal groups, primarily from China, operate cyber scam centres.

These groups often impersonate legitimate entities, including government agencies, banks or tech companies, to trick victims into providing sensitive information, making payments or downloading malicious software.

The Global Anti-Scam Alliance and ScamAdviser produced the 2023 Global State of Scams report, revealing that globally 78% of respondents encountered at least one scheme in the previous 12 months and 59% reported encountering scams monthly.

Singaporeans (US$4,031), the Swiss (US$3,767) and Austrians (US$3,484) suffered the highest average financial losses per victim. Globally, scams caused an estimated US$1.026 trillion in losses, equal to 1.05% of the global gross domestic product (GDP).

Topliss highlighted the rise of authorised push payment fraud and identified deepfake technology as a growing fraud threat in Southeast Asia. Deepfakes, which use artificial intelligence (AI) to create highly convincing fake images, videos or audio recordings, significantly challenge fraud prevention by making it increasingly difficult to distinguish authentic content from fake.

Topliss highlighted how fraud affects more than just financial losses, explaining that it erodes consumer trust in online interactions and fosters a growing unease that can ultimately hinder the digital economy’s growth.

“People are starting to get wary now when they go online. Then there’s this bigger sense of unease that there’s scams coming at consuners constantly,” said Topliss.

“Losing trust potentially has a bigger financial impact on organizations in the digital space right now than money being lost due to frauds.”

Leveraging technology to combat fraud in Southeast Asia

Topliss emphasised that technology providers like LexisNexis Risk Solutions play a crucial role in fraud prevention, stating that effective strategies in today’s landscape rely on advanced technology and data analytics.

Topliss stressed the importance of flexibility in fraud prevention platforms, highlighting the need to integrate various data sources. He explained that incorporating external data or connecting to specific tools strengthens a system’s capability to identify sophisticated fraud attempts.

He explained that technology platforms like LexisNexis® ThreatMetrix® use diverse data sources and AI-driven models to analyse complex fraud patterns and correlations, providing real-time, highly accurate risk insights in support of risk decision making.

Another product, LexisNexis® BehavioSec® analyses data from a user’s online interactions to create unique digital risk signals, providing insights into the user’s historical online behaviours and determining whether the person behind atypical behaviours have malicious intent. Both products sit on LexisNexis® Dynamic Decision Platform® and contribute to the LexisNexis® Digital Identity Network®.

Topliss highlighted that a comprehensive solution should incorporate AI to generate dynamically updating, anonymised digital identities, each with its own risk profile. An aptly linked digital identity presents a comprehensive view of an individual’s online presence, helping businesses assess the authenticity of a user’s digital interactions. AI helps detects synthetic and stolen identities, identifies unusual behaviours like location anomalies, flags new email addresses shipping addresses from the same device and helps organisations assess the likelihood of fraud.

Topliss explained that such intelligence identifies fraudulent activities, builds trust by recognising legitimate behaviours and improves customer experience by minimising friction for genuine users.

“An AI-powered multi-layered tool joins together individual dots of digital intelligence to lead to a better understanding of digital personas. That helps us to look for anomalies,” said Topliss.

“In ecommerce, we’ve seen a 26-27% reduction in manual reviews, so more customers are getting their products quicker. That obviously translates to higher revenues and reduced cart abandonment rates.”

The need for industry collaboration

Topliss also emphasised the limitations of individual banks in combating fraud, noting that their visibility is often limited to customer activities within their own ecosystems.

The Digital Identity Network® addresses this issue by dynamically and continuously updating digital identities across participating institutions and enabling banks to identify patterns and anomalies they might otherwise overlook.

This capability plays a critical role in identifying money mules, intermediaries whom fraudsters recruit to transfer stolen money between accounts, obscure its origins and hinder authorities from tracing the funds back to the perpetrators.

Collaborating across the banking industry is essential for identifying mules, as pooling data allows banks to track the movement of money and flag suspicious accounts that might not trigger alerts individually.

“Banks must examine where the money is being transferred, which is often to an account outside their institution, leaving them with minimal information about that account,” said Topliss.

“Participating in a global collaboration and data network transforms the situation, as increased collaboration enhances the ability to address these risks effectively.”

Featured image credit: edited from freepik

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