The Danger Of Fake Accounts To Businesses, Researchers Describe The Most Common Cases That Often Occur

Fake accounts are often used for fraud and are very disturbing. (photo credit: kaspersky)

JAKARTA - Elon Musk's widely reported Twitter buyout offer is yet again demonstrating the disruptive effect fake accounts can have on businesses. Highlighting this further, it was reported that last year Facebook removed 6.5 Billion "bad" accounts and, by some estimates, nearly half of the accounts on Instagram were fake.

However, social media companies are not tackling this problem alone. Businesses such as online retail, e-commerce, banks, and several others, are also at risk. Why do these organizations need to be wary of fake accounts and how can they be harmed? Kaspersky Fraud Prevention experts have outlined the most common cases here:

Bonus Theft

When a company allocates a budget for their loyalty program, the goal is to attract new customers and help build a mutually beneficial relationship with them. Fraudsters creating fake accounts, however, can largely undermine these efforts.

These online scammers are lured in by the profit potential, with 48 trillion US dollars (IDR 672 quadrillion) of unused loyalty points accumulated globally. Many of these programs, such as those that offer welcome bonuses, are usually easy to sign up for and often aren't protected by two-factor authentication, leaving many opportunities for fraud.

Fraudsters can use or resell welcome bonuses, promo codes, or other sign-up prizes, or they can increase their chances of winning prizes in promotions by participating from multiple accounts. Sometimes unofficial resellers can also take advantage of this scheme, use the welcome bonus and then resell it on another site; this is then accompanied by the added benefit of more loyalty program bonus points and potential financial rewards.

Fake accounts harm shoppers who end up buying the desired item without a discount, or even lose the opportunity to buy a limited product because it has already been purchased. This situation also has a negative impact on retailers and brands, undermines customer trust in the brand and renders marketing activities ineffective, thus damaging long-established relationships with real buyers.

Fake Reviews

93% of consumers say online reviews have an impact on their purchasing decisions. It's no surprise then that fake reviews have become commonplace. This situation may be beneficial to some unscrupulous dealers, but in the long run it can harm both the seller and the market that lists the product.

A recent survey revealed that 67 percent of consumers are concerned about the credibility of a review and 54 percent will abandon their purchase if they suspect a product review is fake. Any platform that allows the placement of false reviews may also be accused of violating consumer laws by the relevant authorities.

Money laundering

Financial organizations are very serious about the authenticity of their customer accounts, however, a number of fraudulent individuals can also be found here. This is money laundering, an account used by irresponsible parties to launder criminal funds. Even though they are created by real people, they are not used for their intended purpose, instead they accept illegal finances into their accounts and transfer them to other parties.

Online scammers use sophisticated tricks to carry out this money laundering scheme. Turn to automation tools, proxy servers, remote administration tools, and TOR networks to avoid detection and avoid associating their activities with previous schemes.

The presence of a high level of money laundering among the customer base can lead to violations of Anti-money laundering (AML) laws and serious reputational damage to banks. To organizations, they can be suspected of aiding illicit activities and may attract the attention of law enforcement agencies during money laundering investigations.

Counterfeiting is the dark side of anonymity, the advantage that the internet gives us. As long as it is easy to create fake accounts, fraudsters will continue to try to take advantage of this opportunity for financial gain or to manipulate public opinion.

To address this, each digital platform can make adjustments to significantly complicate authentication procedures. However, it can also affect user experience and lead to potential customer loss.

Another method used to eradicate various fraudulent schemes that are on the rise is to use anti-fraud technology. Artificial intelligence, machine learning and predictive analytics make it possible to spot fake accounts and suspicious behavior. This solution is also able to distinguish fake from legitimate users without affecting the convenience of online facilities.