Brand Impersonation Fraud Increasing
According to data released by the FTC in its annual Consumer Sentinel Network Data Book, nearly half of the fraud reported to the federal government in 2023 fell into brand impersonation fraud.
An astounding 330,000 scams were impersonating businesses, and 160,000 were impersonating government institutions.
Allure Security’s online brand impersonation detection data corroborates the FTC’s findings.
Impersonation fraud shows no sign of slowing down. Not only are complaints up from previous years, but monetary losses as well.
THE STATE OF FRAUD IN 2023
Whether in terms of reports or dollars lost, fraud was up in 2023.
A New Evolution in Brand Impersonation Fraud Tactics
While it’s not a new development that business and government impersonation scams frequently target consumers, the FTC reports a shift in the methods and tactics used to fool people.
In 2023, reports highlighted that scammers frequently impersonate multiple organizations within a single scheme. Where consumers would once receive fraudulent messages posing as a brand or government entity by itself, we now see numerous impersonations within multiple layers of the same scam.
The FTC’s 2024 Imposter Scams Spotlight reports that there is “an increasingly blurred line between business and government impersonation scams: many scammers impersonate more than one organization in a single scam.”
This may, for instance, take the form of a fake government email directing users to a bogus bank website. A website designed to harvest user credentials or instruct users to contact a scammer posing as an official corporate or government entity.
Business imposter scams were the most reported fraud subcategory (373,683 reports totaling ~$1,372,765,373 in losses), with government impersonations coming in third (191,079 reports totaling ~$701,949,725 in losses).
Excluding reports classified as “unspecified,” scams impersonating businesses and government entities accounted for 48% of all reports sent to the FTC.
Considering reports to the FTC account for all types of fraud, it is hard to overstate the volume of imposter scams that have victimized consumers in 2023.
Brand Impersonation Fraud Contact Method Effectiveness
A scam’s contact method has played a significant role in efficacy over recent years. According to the FTC report, a correlation exists between the contact method or “invite vector” and a scam’s effectiveness.
Increasing by just under 33,000 reports, 2022’s study logged 342,423 fraud reports using web, social, or mobile as an attack vector. Meanwhile, 2023 saw 375,055, which is about a 10% increase. These contact methods were mentioned in 25% of 2023 fraud reports.
And were by far the most likely to report losses resulting in $2.38 billion in monetary damages — up 12% over 2022.
Scams that use websites, apps, and social media as a contact method are up year over year in both prevalence and danger.
Contact Methods More Likely to Result in Monetary Loss
Fraud schemes that used websites or apps as their contact method saw 60% of victims report monetary loss.
Fraud with social media as a contact method saw 68% of victims report monetary loss.
Comparing these attack vectors and their associated monetary loss with other contact methods shows their effectiveness.
Fraud stemming from fake websites, social media, or mobile apps will most likely lead to consumer financial damage.
These attack vectors are highly effective and dangerous, and brands – should prioritize protecting customers across relevant channels.
That might look like registering a brand account on social media to establish yourself. Additionally, communicating where to download mobile apps and proactively monitoring for website impersonations, deceptive social media profiles targeting your customers, and rogue versions of your mobile apps are important.
Combatting the Continued Surge in Online Brand Impersonation Fraud
Across the board, fraud is continuing to grow year over year. Scammers are taking advantage of our increasingly online ecosystem, incorporating new methods to victimize more people and do more damage.
Abusing consumers’ familiarity with websites, mobile apps, and social media has proven to be an extremely effective method for introducing scams to exploit consumers.
Brands should consider managing this risk through increased communication, proactivity, and presence.
This not only gives users a way to recognize your brand in a particular platform but assists in fighting any impersonations that might surface on said platform.
This provides legal grounds for your brand to control the use of its name and logo, making the removal of online impersonations a significantly easier process.
Monitor for rogue versions of your mobile app published elsewhere. If your brand’s mobile app is only available for download on official app stores (e.g., the Google Play store or Apple App Store), make sure your customers know by clearly communicating that as often as appropriate. Actively monitor for mobile fraud and rogue versions of your mobile app on third-party app marketplaces.
Be sure that you have a strategy in place to monitor for any potential impersonations of your brand across the web. For resources on free tools to check out, read our blog on the topic. Recognize that while free tools exist and do help, the only way to fully protect your customers and get ahead of this problem at a realistic scale is to hire a pro like Allure Security.