The FinTech Revolution: Fraud Prevention in the FinTech Space

Ariel S. Glasner and Bridget Mayer Briggs

This is the sixth installment in a series of articles. For more background on this topic, please read our first article in the series, An Introduction to Financial Technology; our second article, The FinTech Revolution: Enforcement Actions Brought against FinTech Companies and Their Implications; our third article, The FinTech Revolution: The Impact of Blockchain Technology on Regulatory Enforcement; our fourth article, The FinTech Revolution: Complying with Anti-Money Laundering Laws to Avoid Regulatory Enforcement Actions; and our fifth article, The FinTech Revolution: How Data Breaches Can Result in Regulatory Enforcement Actions.

As the FinTech industry rises in popularity, the number of digital transactions—also known as e-commerce—is sky-rocketing, creating ever-greater opportunities for fraud.1 These vulnerabilities are compounded by an expansion in the range and assortment of digital transactions. As a result, there is a critical need for companies in the FinTech industry to ensure that they have sound and comprehensive fraud prevention strategies, policies, and programs in place.

The Problem

People seeking to engage in fraudulent schemes or artifices are attracted to an industry that is on the cutting edge of technological development where they see opportunities to exploit weaknesses in data protection. Identity theft (the misappropriation of someone else’s identity by targeting his or her personal information), and “phishing” (using fraudulent communications such as websites, text messages, and e-mails to induce people to part with their personal information), are two of the more common types of fraudulent devices that are employed, in addition to other sophisticated fraudulent schemes.2 Continue reading “The FinTech Revolution: Fraud Prevention in the FinTech Space”