In the last few years, the whole world has had to deal with a number of challenges. There was a pandemic and wars, and it was not easy for many people from a financial point of view. What's more, we are on the brink of a global recession, which is causing new worries.
Signs that point to a recession
World bank experts expect global economic growth to slump to 2.9% and are also convinced that it will continue in the same way in 2023 and 2024. The majority of them believe that recessions are primarily caused by the war in ukraine.
But what are the new challenges today compared to previous recessions??
Since previous recessions, the financial world has become highly digitalized. And unfortunately, this digitalization does not only bring advantages, because it increases the risks of financial fraud. So financial institutions are now faced with the questions of whether more financial fraud will actually occur during the new global recession and, if so, how it might be prevented.
What drives people to financial fraud
The service company MNP has developed what it calls a "fraud triangle" to explain why people commit fraud in the first place. The three sides of the triangle look like this:
1. Opportunity: the motto here is "opportunity makes thieves". Opportunities for fraud arise, for example, from security gaps in internal control systems. 2. Motivation: the motivation is to enrich yourself financially. People in financial distress are more likely to commit fraud. 3. Rationalization: for this point, in times of recession, the main factor to be mentioned is the strong economic uncertainty.
Also, for the first four months of 2021, transunion already found a 149% increase in fraud attempts. This was probably due to the pandemic and the increased use of digital channels. It has opened up a whole new world of access to financial structures for fraudsters. This means that all the changes in the world of finance also open up new opportunities for fraud.
Examples of recession-related fraud
Recessions mean that many people are not doing so well financially and professionally. If you then want to rent a property, you may feel compelled to falsify important information. Payrolls are often falsified to make them look better. For landlords, this can mean that they end up with tenants who can't pay for the apartment.
Those who can no longer raise enough money usually find themselves in a desperate situation. This leads to people being prepared to take high risks. Many see their only option as obtaining a loan by providing false information.
Online shopping fraud usually goes hand in hand with identity theft. The stolen identities are then used to commit payment fraud when buying online. But they are also used for renewed cyber fraud.
Most mortgage fraud perpetrators are insiders such as real estate agents, appraisers, insurance consultants, lenders, etc.
Again, people who are desperate to get money are less likely to act prudently and riskily. Fraudsters know this and shamelessly exploit people's desperation.
Here's how to avoid becoming a victim of financial fraud
An economic crisis can really affect anyone in one way or another. Financial institutions can't always prevent fraud with certainty, so it's important to protect yourself as much as possible, even as an individual.
– be aware of the new risks
The first important step is to become aware of the changed risk situation. Only then will you know what to look out for in the future and be able to take appropriate security measures.
– use a VPN
A VPN is a security measure that no one should do without in this day and age. It gives you additional privacy and data protection. This minimizes the risk of you becoming a victim of online fraud. A VPN is available for switzerland, germany and austria.
– trust is good, control is better
Especially in the current situation, it is important not to fall for dubious providers. Cyber criminals can, for example, pose as credit providers or similar in order to enrich themselves financially. Before you accept an offer, you should first take a close look at the seriousness of the offerer.
– be careful with links and e-mail attachments
Never open attachments from unknown email senders just like that. The same applies to suspicious links. You may be redirected to fake websites. If you enter private information there, it will then be intercepted by the fraudsters.