Fraud types

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Digital fraud continues to evolve, and increasingly sophisticated attempts continue to exploit current systems. Using Credolab's fraud alerts, you can fight off several common types of fraud that threaten customer trust and financial stability.

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8 Essential Fraud Device Manipulation Alerts To Use

Credolab has developed a comprehensive set of fraud alerts to address these fraud types effectively. In this blog, we dive into eight essential fraud device manipulation alerts provided by Credolab that financial institutions can leverage to stay ahead of sophisticated fraud tactics:

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1. Device Farm

With the rise of automated fraud schemes, device farms have become a growing threat. Fraudsters use these farms to mimic legitimate users on a massive scale, making it difficult for financial institutions to detect malicious activity.

Device farms enable fraudsters to coordinate multiple physical devices and mass accounts to simulate legitimate user behaviour while applying for loans in mass. Devices part of a farm are often connected and controlled centrally, plugged in and charging, and not moving.

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A Device Farm refers to a large-scale collection of physical devices used for malicious purposes, such as conducting automated fraud, mass account creation, or large-scale bot attacks.

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To understand the risks posed by device farm fraud, let’s explore some common scenarios where this tactic is used:

• Device farms often automate applications, such as rapid credit card or loan applications, to exploit system vulnerabilities. Credolab’s repeated device usage alerts detect and block these repeated fraudulent submissions.
• Fraudsters use device farms to create thousands of accounts simultaneously for malicious purposes, such as fake product reviews, fake social media accounts or, in the case of financial institutions, fake accounts set up for further fraud activities (e.g., applying for loans). Centralised network access alerts detect this by flagging multiple devices using the same network.
• Device farms may simulate mass human interactions through bot attacks, such as logging into accounts or overwhelming a system with requests (e.g., DDoS attacks).  Limited mobility and consistent power supply alerts work together to flag suspicious behaviour patterns typical of bot attacks.

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Here’s how Credolab’s fraud alert can help:

• Consistent power supply alert identifies continuously charged devices, indicating non-standard usage patterns, such as automated systems that require constant power.
• Centralised network access alert flags multiple devices with the same WiFi network, signalling coordinated fraud activity.
• Repeated device usage alert blocks the same unique identifier devices from the same IP address over time, signalling repetitive or automated actions.
• Limited mobility alert flags devices showing no physical movement, indicating a hallmark of device farms where devices remain in one location.

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2. Cloning and Emulation Detection

As financial institutions bolster their defences, fraudsters have turned to more sophisticated tactics, such as cloning apps and emulating devices, to bypass security measures and carry out large-scale attacks. These methods can lead to significant financial loss, data breaches, and reputational damage.

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Cloning refers to creating duplicate applications to deceive users, where fraudsters create exact replicas of legitimate apps or devices to deceive users and systems. Emulation involves running software in virtual environments to mimic legitimate devices, bypassing security measures. These tactics can lead to account takeovers and synthetic identity fraud, making them particularly dangerous. 

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To understand the risks posed by cloning and emulation fraud, let’s explore some common scenarios where these tactics are used:

• Fraudsters might clone a banking app and distribute it through unofficial channels. Users download the fake app, enter their credentials, and then have their information stolen, leading to account takeovers or unauthorised transactions.
• Emulators might be used to create fake device fingerprints, allowing fraudsters to bypass detection mechanisms. This makes large-scale attacks, such as credential stuffing or automated fraud, easier to execute undetected.
• Fraudsters may clone legitimate apps, capture user credentials, and then run them through emulators to attack multiple platforms or create fraudulent accounts across various services.

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Here’s how Credolab’s fraud alerts help:

• Cloning detection alerts scan for discrepancies in app certificates or unusual installation patterns, preventing sensitive information theft, account hijacking, and unauthorised transactions. 
• Emulation detection alerts flag virtual environments by recognising non-standard device interactions deviating from user behaviour. They block automated, fraudulent activities, mass account registrations, and legitimate user behaviour simulations.

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3. Device Integrity

As digital fraud continues evolving, fraudsters increasingly tamper with device integrity to bypass security measures. By rooting devices, manipulating applications, or changing device identifiers, they can gain unauthorised access to financial systems, enabling large-scale fraud and potentially leading to significant financial losses and reputational damage for institutions.

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Rooting or jailbreaking refers to removing software restrictions on devices, giving users (or fraudsters) full access to the system. Application manipulation involves modifying legitimate applications to behave unintendedly, potentially bypassing security controls. Device identifier changes include altering its unique identifier (like IMEI or MAC address) to mask its true identity, making it easier for fraudsters to evade detection.

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To understand the risks posed by device tampering, let’s explore some common scenarios where device integrity is compromised:

• A fraudster roots a device to disable security features, installs malware, and uses the device to commit fraud, such as making unauthorised transactions or stealing sensitive data.
• Manipulated apps might bypass two-factor authentication (2FA), granting unauthorised access to financial accounts or performing actions that appear legitimate to the system.
• Device identifier spoofing can allow a fraudster to use the same device to create multiple fraudulent accounts or evade blacklists. Combined with other methods, this can result in large-scale, coordinated attacks.

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Here’s how Credolab’s fraud alerts help:

• Rooting or jailbreaking alerts identify unusual device behaviour and prevent fraudsters from bypassing security measures, injecting malicious code, or gaining unauthorised access by flagging devices that have been tampered with.
• Application manipulation alerts detect modified app behaviour, helping to strengthen security systems, block malicious actions disguised as legitimate, and reduce fraud.
• Device identifier change alerts track suspicious activity by flagging altered device identifiers, easily linking fraudulent actions to a single source.

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4. Remote and Automated Control

As fraudsters increasingly turn to remote access tools and automated scripts, device and user security threats arise. These techniques allow large-scale fraud operations to be executed in seconds, making identifying and blocking such activities critical.

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Remote access tools allow fraudsters to take control of devices remotely, often without the user’s consent, enabling them to perform unauthorised transactions or steal sensitive data. Automation scripts would allow attackers to scale their operations, automatically automating actions on a device or account without human intervention, such as account creation or transaction execution across multiple devices simultaneously. Together, these tools pose a significant threat to propagating fraud.

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To understand the risks posed by remote and automated control fraud, let’s explore some common scenarios where these tactics are used:

• Fraudsters may install remote access tools on a victim's device, giving them control over financial accounts. This allows them to make unauthorised transactions or steal information without the user’s knowledge.
• Fraudsters use bots to automate creating fake accounts, conducting fraudulent transactions, or exploiting vulnerabilities in financial applications at scale. In more severe cases, automated attacks can overwhelm financial systems through DDoS attacks, leading to service outages or breaches.
• A fraudster might use remote access tools to compromise devices and then deploy automation scripts to carry out mass fraudulent transactions across a compromised account network, potentially causing widespread financial loss.

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Here’s how Credolab’s fraud alerts help:

• Remote access alerts monitor unusual device control patterns, detecting when unauthorised third parties interact with a device. This helps prevent fraudsters from controlling devices for fraudulent transactions, unauthorised access, or the theft of sensitive data before they escalate.
• Automation alerts flag rapid, repeated actions or bot-like activity that deviates from normal human behaviour, stopping large-scale attacks targeting multiple accounts or systems simultaneously before they can succeed.

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5. Network and Location

As financial institutions strengthen their fraud detection measures, fraudsters increasingly turn to Proxy, TOR, and VPN networks and location spoofing to obscure their true locations, complicating the fraud detection process and enabling cross-border fraud.

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Proxies, TOR, and VPN tools can mask a user’s real IP address and location, allowing them to appear to be accessing the internet from a different place. Location Spoofing refers to falsifying a device's location, often bypassing geographic restrictions or evading detection. Geography Mismatch occurs when there is a discrepancy between the expected and reported location of a user or device.

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To understand the risks posed by network and location-based fraud, let’s explore some common scenarios where these tactics are used:

• Fraudsters use VPNs to appear as if they are in a different country, allowing them to access services or commit fraud that would otherwise be blocked. This enables cross-border fraud and can make it difficult for financial institutions to detect unauthorised activity.
• Location spoofing might circumvent geo-blocks on financial services to bypass geographic restrictions or gain access to services unavailable in their real location. This enables fraudsters to appear as legitimate users from different regions and gain access to controls.
• A geography mismatch may occur when a fraudster uses stolen credentials from one country but performs transactions from another. This discrepancy often goes undetected, leading to significant financial losses and allowing fraudsters to evade detection.

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Here’s how Credolab’s fraud alerts help:

• Proxies, TOR, and VPN usage detect discrepancies in IP addresses and monitor for frequent location changes or hidden networks that deviate from normal user behaviour. These alerts flag obscured or unusual network activity to identify and block potentially fraudulent transactions.
• Location spoofing alerts detect when a device attempts to falsify its location, preventing fraudsters from bypassing geographic security checks and accessing restricted services.
• Geography mismatch alerts track discrepancies between the expected and actual locations of users or devices, helping to identify mismatches between expected and actual device locations to detect potential fraud attempts and ensure timely intervention.

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6. Anonymity and Obfuscation

Anonymity tools such as disposable emails and anonymous messengers have become key resources for fraudsters, allowing them to organise and execute large-scale attacks without revealing their identities or risking detection.

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Anonymous Messengers refer to communication platforms, like anonymised messengers, that do not require user identification, making it difficult to trace users. Temporary Emails include disposable email addresses used temporarily to sign up for services, often without linking to a real identity. Non-market applications refer to apps downloaded from unofficial sources that might be modified or malicious, allowing fraudsters to install malware or steal credentials.

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To understand the risks posed by anonymity and obfuscation in fraud, let’s explore some common scenarios where fraudsters employ these tools:

• Fraudsters use anonymous messengers to plan and execute fraud schemes, knowing their communication will not be easily traced.
• Temporary emails are used to create multiple accounts quickly, often to perform fraudulent activities like phishing, spamming, or conducting fraudulent transactions.
• Fraudsters use non-market apps to install malicious software on users' devices that they might use to steal banking credentials or intercept one-time passwords (OTPs) sent via SMS for financial transactions.

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Here’s how Credolab’s fraud alerts help:

• Anonymous messenger alerts monitor suspicious communication patterns that deviate from typical user behaviour, tracing suspicious communications and disrupting fraudsters' coordination efforts.
• Temporary email alerts flag fake accounts from disposable emails and link fraudulent activities to their sources.
• Non-market application alerts prevent unvetted app installation from unofficial sources to reduce the risk of malware infections and data breaches.

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7. App Store and App Category

Fraudsters increasingly use non-market applications and suspicious surges in certain app categories to bypass security measures and execute fraudulent activities. Non-market applications refer to apps downloaded from sources other than official app stores. These apps often bypass standard security checks and may contain malware or malicious software. A Financial Application Installation Surge involves a sudden increase in the installation of financial apps on a device, which may signal the creation of fraudulent accounts. Gambling Application Usage is the presence of gambling apps on a user’s device, often associated with risky financial behaviour or potential money laundering activities.

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To understand the risks posed by non-market applications and suspicious app usage, let’s explore some common scenarios where these tactics are used to commit fraud:

• A fraudster downloads multiple financial apps from unofficial sources to create fake accounts and commit fraud. These apps bypass traditional security protocols, enabling the fraudster to exploit the system undetected.
• The sudden installation of multiple financial apps might be part of a coordinated effort to quickly open accounts and transfer illicit funds before the fraud is detected. This type of activity often signals an organised fraud ring targeting financial institutions.
• Gambling apps may be used by fraudsters to funnel money through online betting as part of a laundering scheme.  Fraudsters can evade detection and clean dirty money by transferring money into betting accounts and withdrawing it as legitimate winnings.
• New or empty devices might be employed in fraud schemes to execute transactions that appear clean, without the digital history that might raise suspicion. These devices make it difficult for financial institutions to detect fraud early.

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Here’s how Credolab’s fraud alerts help:

• Non-market application alerts monitor apps downloaded from unofficial sources, flagging those that may bypass security measures or introduce malware. These alerts help to reduce the risk of unauthorised access and data breaches.
• Financial application installation surge alerts flag unusual surges in financial app installations that may indicate fraudulent account creation. By detecting these surges early, fraud can be prevented.
• Gambling application usage alerts monitor the presence of gambling apps on a device, flagging potentially risky financial behaviour or money laundering attempts.

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8. Device Status and Usage

Fraudsters increasingly rely on new or reset devices to execute transactions that appear clean, without the digital history that would typically raise suspicion. Whether newly registered or recently reset, these devices allow fraudsters to evade detection systems by appearing as legitimate users.

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New Device Usage involves financial transactions from a newly registered or recognised device, which fraudsters often use to make transactions look legitimate. Empty Device Usage refers to a device that appears to have been recently reset or has minimal data, indicating it may be recently set up, showing minimal data or activity, making it challenging to trace fraudulent activity.

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To understand the risks posed by new or reset device usage in fraud, let’s explore some common scenarios where fraudsters employ these tactics:

• Fraudsters might use new or reset devices to carry out transactions that appear clean, without the digital footprint that would typically trigger fraud detection systems. In coordinated attacks, multiple new devices might be employed to open fraudulent accounts and execute transactions before being detected.

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Here’s how Credolab’s fraud alerts help:

• New device usage alerts monitor new devices' registration and activity patterns, identifying potential fraud attempts by flagging clean devices, such as those containing newly created profiles without sufficient historical data that could bypass detection systems. 
• Empty device usage alerts detect reset devices with minimal digital history, preventing fraud by flagging reset devices with no personal data history to conduct unauthorised transactions and raise suspicion of fraudulent activity.

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Financial and non-financial institutions can enhance their defences against sophisticated fraud attacks by leveraging fraud alerts built on device and behavioural biometrics data.

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Conclusion

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With the rapidly evolving fraud landscape, it is no surprise that fraudsters are becoming more sophisticated. They use various tactics to exploit vulnerabilities in financial systems, from device farms and remote access tools to location spoofing and non-market applications. Fraudsters are constantly finding new ways to bypass traditional security measures.

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What is the ideal solution to combating fraud? Investing in a sophisticated counter such as Credolab’s fraud alerts.

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Credolab’s fraud alerts, powered by advanced devices and behavioural biometrics, provide a comprehensive defence against these diverse fraud types. By monitoring device integrity, usage patterns, network activity, and application behaviour in real time, Credolab offers early warnings that help detect and prevent fraud. With tailored solutions for detecting new device usage, anonymous communications, and geography mismatches, Credolab enables businesses to safeguard their operations and maintain customer trust.

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