person browsing on phone and laptop with security and padlocks online fraud prevention holograms
person browsing on phone and laptop with security and padlocks online fraud prevention holograms

Your Guide to the Most Common Types of Online Fraud in the Philippines

As the world continues to reel after the global pandemic, brick-and-mortar stores are still getting a foothold on the physical market – with most transactions still happening digitally. While digital transactions and online payment channels have made e-commerce easy and comfortable for consumers, they have also opened a plethora of risks regarding security and financial privacy. Unfortunately, online fraud has been at an all-time high in both the Philippines and abroad – with almost 45% of Filipino respondents claiming to have been targeted by online fraudsters. These include phishing, malware, and even identity theft. To help you understand the risks, we’ll discuss the common types of online fraud and how you can avoid falling into the traps of fraudsters.

fraud alert showing on computer screen

What Is Online Fraud? 

Online fraud is a type of crime that involves the use of digital technology to commit financial or other types of fraud. For example, it can involve using stolen credit cards, phishing emails, malware, and other malicious software to gain access to personal information or financial accounts. Online fraud can also include identity theft, where criminals use stolen personal information to open new accounts or make purchases in someone else’s name. 

As technology advances, so do the methods used by criminals to commit online fraud. Therefore, it is essential for individuals and businesses alike to be aware of the risks associated with online transactions and take steps to protect themselves from becoming victims of online fraud.

What Are the Common Types of Online Fraud in the Philippines?

While financial institutions and telecommunication companies have started to update their safeguards against online fraud through fraud analytics, it is still very much present in the Philippines’ digital landscape. Some of the most common types of online fraud being committed today include:

  1. Phishing

    Phishing is a common type of internet fraud that uses social engineering techniques to deceive victims into providing sensitive information such as usernames, passwords, and credit card details. It is one of the most common forms of cybercrime and can be used to steal money or data from unsuspecting victims. Phishing attacks are typically carried out through email, text messages, or malicious websites that appear legitimate but are actually designed to steal personal information.

    tablet and phone with email fraud notification

  2. Email Spoofing

    Email spoofing is a type of cyberattack that involves sending emails with false information in the sender field. Attackers use this type of online fraud to disguise their identity and make it appear that the email was sent from a legitimate source. Email spoofing aims to trick recipients into believing that the message came from someone they know or trust, such as their bank or employer. By doing so, attackers can gain access to sensitive information or spread malicious content. Email spoofing can also be used for phishing attacks, where attackers attempt to steal personal data or financial information from unsuspecting victims.

  3. Check Overpayment Scams

    Check overpayment scams are a common type of internet fraud that involves sending a check for more money than the amount owed. The scammer will then ask the recipient to return the difference in cash or wire transfer. This type of scam is becoming increasingly common, as scammers take advantage of unsuspecting victims who may not be aware of the risks associated with accepting checks from strangers.

    hacker trying to takeover an account online

  4. Account Takeover

    Account Take Over (ATO) online fraud is a type of cybercrime involving criminals gaining access to an individual’s online accounts and using them for their financial gain. This type of internet fraud can be used to steal money, make unauthorized purchases, or even commit identity theft. ATO fraudsters use various methods to access accounts, including phishing attacks, malware infections, and social engineering techniques. Therefore, individuals and businesses must be aware of the risks associated with ATO fraud and take steps to protect themselves from becoming victims.

  5. SIM Swap Scam

    With the Philippines’ transition to LTE and 5G networks, telecommunication companies requested sim card upgrades for their customers. Unfortunately, this also triggered online scams – wherein fraudsters would pose as a certain individual and request for a sim card update in lieu of the original owner. This gives them access to future calls, messages, and verification codes to online wallets, official emails, and even social media accounts.

    Another type of this online fraud technique is when scammers pose as telecommunication officers. They then contact SIM card owners and request private information, such as their full names, phone numbers, verification codes, and addresses.

    hacker spying online using a phone

  6. Spyware 

    Spyware fraud is a common type of internet crime that involves the use of malicious software to gain access to confidential information. Criminals often use it to steal personal data, such as passwords, credit card numbers, and bank account details. Spyware fraud can also be used to monitor user activity on a computer or mobile device without their knowledge. This type of internet fraud can have severe consequences for victims, including identity theft and financial loss.

  7. Identity Theft 

    Identity theft online fraud is a type of cybercrime that involves stealing someone’s personal information such as their name, address, Social Security number, credit card numbers, and other sensitive data. This stolen information can then be used to commit financial fraud or different types of criminal activities. Identity theft fraud is becoming increasingly common as more people use the internet for shopping and banking.

    cashback reward showing on phone screen

  8. Bonus Abuse

    If a fraudster uses linked accounts to take advantage of online promotions, sign-up bonuses, and loyalty points (or loyalty rewards programs), that’s bonus abuse. For example, an individual, regardless of whether they’re a loyal customer, can create multiple social media accounts and e-mails to sign up for “first-time user” vouchers.

    Another merchant term they can exploit is the referral program to get referral bonuses or points. It may look great on your marketing analytics, but if it’s unusually high or you notice high churn, bonus abuse might happen. Fortunately, this can easily be detected through online fraud detection tools, which track the account names and numbers for faster abuse detection.

How to Prevent the Different Types of Online Fraud in the Philippines 

To contain the risk of online fraud, companies today are putting more stringent regulations and precautions to keep customers and online users safe. From using two-factor authorization for online accounts to getting the assurance of bolstered fraud detection in banking, users today are becoming safer from online fraud attacks. However, some fraud attempts can still fall through – primarily through the prevalence of misinformation regarding the types of internet fraud. To help you better secure your online financial accounts and credit information and avoid falling pretty to online fraud, here are a few tips and recommendations from tech and financial experts:

  1. Use complex passwords for online accounts. 

    While many websites today require special characters for more complicated passwords, many people still choose easy-to-remember combinations. Unfortunately, this also heightens your risk of hackers guessing your password and gaining access to your accounts.

    For lower chances of account takeovers, go for a complex combination of numbers, letters, and special characters to heighten your accounts’ security.

    fishing hook pierced through a credit card

  2. Stay aware of online fraud techniques in phishing. 

    As more and more people learn to transact online, online fraudsters have now upgraded their techniques to target more online users. Knowing the different types of phishing and internet fraud will keep you updated so that you won’t accidentally click on suspicious links, emails, and text messages that may lead you to questionable websites.

  3. Connect only to secure internet networks. 

    Public Wi-Fi has become ubiquitous around the Philippine metro today, with internet connection almost essential in everyday life. Unfortunately, public internet connections may also serve as breeding grounds for online fraudsters. Data you may send through public networks may be intercepted and used to gain access to your devices.

    woman entering OTP on laptop for online payment

  4. Verify payment methods online. 

    When shopping online, ensure that you’re inputting your credit card details and linking your bank accounts only through private and secure financial platforms. These are typically indicated through padlock logos on the purchase page. Some e-commerce companies also present warnings and assurance that you’re being redirected to trustworthy websites where you will be asked to input your details.

Now, while individual prevention of the different types of online fraud is easy, the pressure of protecting businesses and customer information still falls on the shoulders of company owners and website developers. To address the ever-increasing risk of online hacking, fraud, and other illegal online activities, companies are now turning to more advanced digital solutions for fraud management, including AI detection and in-depth social media verification.

FindSocial: FinScore’s Answer to Online Commercial Fraud Detection 

With all these common types of internet fraud, an online business needs to integrate a fraud prevention tool into its system. The name of the game in fraud prevention is to detect early on if a user is trustworthy or not. Of course, you have the right to protect your business from fraud attacks since this will also keep your real, good customers’ identity and money safe. As your business is going strong, your efforts to keep fraudulent activities at bay should also be a top priority. But where and how to start?

To answer this call, FinScore has created a way to reduce online fraud by up to 80% by tapping into alternative data for fraud prevention. FindSocial helps companies protect their online business from customer fraud and business exploitation. Customer signups are scanned, verified, and scored to double-check the verity of each account through social media. FindSocial utilizes social media activity, location, and avatar consistency to help you detect identity theft and defaults and make better business decisions for better business longevity. 

To learn more about FindSocial, reach out to us at FinScore, and we’ll help you safeguard your business and serve trustworthy customers better.

FinScore is a financial technology company in the Philippines that offers a powerful credit scoring platform and fraud detection tools based on alternative data, including telco-based data. 

As the pioneer in lending and scoring of the unbanked, we continuously provide fintech services that empower financial institutions, banks, and credit bureaus with flexible platforms to help them make insightful and reliable credit decisions. Contact us today to learn more about our products and solutions for financial institutions.