Fraud Management & Cybercrime

Mobile Wallets: The Next Fraud Target?

Video Interview with Javelin's Al Pascual on Evolution of Fraud

As the U.S. ramps up its migration to EMV chip payments over the next three to five years, fraudsters will shift their attention to mobile wallets, says Al Pascual of Javelin Strategy & Research.

See Also: The Vulnerability Epidemic in Financial Services Mobile Apps

In a video interview with Information Security Media Group, he says weak identity and verification practices during the mobile-wallet onboarding process, similar to those seen during the early days of Apple Pay, have made it too easy for criminals to hijack mobile accounts.

"Mobile wallet fraud will be the next big thing after CNP [card-not-present fraud]," Pascual says during this interview conducted at ISMG's recent Fraud and Breach Prevention Summit in Toronto. "You saw in some other markets outside the U.S. that when EMV was introduced, gradually criminals migrated to card-not-present fraud. Today, we have mobile wallets, which kind of changes the game a little bit."

With stolen online credentials, fraudsters can open new mobile wallet accounts that fool banks' new-account verification methods, Pascual says.

"We have to find a way to improve identity verification - otherwise, criminals are just going to go to places where it's weak," Pascual says.

In this video interview, Pascual discusses:

  • Why knowledge-based authentication questions and static data pose increasing risk for mobile wallets;
  • How the number of mobile wallet users is expected to grow over the next three years;
  • How card-not-present fraud could fuel mobile fraud.

Pascual leads Javelin's security, risk and fraud practice. He began his career with HSBC during the height of the mortgage boom. While working in HSBC's borrower verification department, Pascual performed enhanced due diligence investigations of high-risk loans. He later joined Goldman Sachs' fixed income, currency and commodities division, serving on its mortgage fraud investigations team. He also worked at Fidelity National Information Services, now FIS Global, overseeing data driven investigations of organized payment fraud groups in the United States. Pascual is a member of the Association of Certified Fraud Examiners and the International Association of Financial Crimes Investigators.

About the Author

Tracy Kitten

Tracy Kitten

Former Director of Global Events Content and Executive Editor, BankInfoSecurity & CUInfoSecurity

Kitten was director of global events content and an executive editor at ISMG. A veteran journalist with more than 20 years of experience, she covered the financial sector for over 10 years. Before joining Information Security Media Group in 2010, she covered the financial self-service industry as the senior editor of ATMmarketplace, part of Networld Media. Kitten has been a regular speaker at domestic and international conferences, and was the keynote at ATMIA's U.S. and Canadian conferences in 2009. She has been quoted by, ABC News, and MSN Money.

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