How IoT is Changing Fraud Detection

How IoT is Changing Fraud Detection
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Experts estimate that the IoT (Internet of Things) consists of more than 50 billion objects communicating online and performing automated tasks without human interaction. All this connectivity improves efficiency and makes our lives easier, but it also puts us at risk.

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Smart technology is highly susceptible to cyberattacks. Anything with an IP address online can be hacked, taken over, and used maliciously. Business fraud is at an all-time high, and although IoT can enhance productivity in the workplace, it can also cause large-scale attacks.

New Tools for Hackers and Fraudsters

In the same way that marketers are using technology to profile customers, hackers are doing the same by illegally tapping into our IoT equipment, accounts, and social media.

Many data breaches have occurred due to email hacking. Using the plethora of IoT devices in the world today, hackers and cybercriminals can use these innovations as new paths of egress. No longer do hackers need to fool users with phishing emails. Instead, they can just hack into the target’s smart fridge and breach connected accounts like a Gmail login if it’s not adequately encrypted. Penetration test experts have proved it possible due to a simple oversight such as an unvalidated SSL certificate.

With IoT rapidly expanding into medical devices like defibrillators, and pacemakers, security officers are growing more concerned. Unfortunately, unskilled hackers have already carried out multiple attacks on pacemaker users.

Smart technology is also widely used in motor vehicles posing additional threats. As far back as 2015, hackers were able to take complete control of a 2014 Jeep Cherokee, sending commands to alter steering, brakes, transmission, and even the dashboard. The bad actors weren’t even close to the vehicle, but with any connected device, there is always the option of danger.

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The biggest reason these things are occurring is that manufacturers never considered the devices vulnerable or expected hackers to use them for entry into an entire network. Although manufacturers quickly address the issues, many IoT devices are still at risk. The complex nature of IoT makes the equipment more difficult to secure properly. To add more gas to the fire, often, these IoT devices work with third-party software, and the gap between hardware and software can form a breach large enough for malicious actors to get in and take what they want.

Harnessing the Latest IoT Trends for Fraud Protection

IoT paves the way for enhanced efficiency, but it also includes inherent risks. As manufacturers of IoT technology and developers of software that interact with them create new solutions, they must prioritize security first to prevent fraud. Some of the ways they can do this are:

  • Biometric Validation – Not only control devices using biometrics but also validate the data to ensure it matches the owner.
  • Geolocation – Verify that the geolocation of the card matches that of the owner.
  • Address and CVV – When processing payments, verify the customer’s address and CVV before allowing any transactions.
  • IP Location – Verify that the IP matches the owner and is not a foreign entity.
  •  Smart Devices – Equip devices with the technology to automatically inspect packets of information sent to them and examine for any malicious software which does not match the original OS.
  •  Merchant Cooperation – Develop a cooperative network between merchants to compare transactions and monitor for any breaches and inconsistent data.
  •  SSL – Secure IoT devices with end-to-end encryption so that no data leaks or is exposed to hackers.
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Pioneers in securing IoT devices rely on AI (artificial intelligence) and ML (machine learning) to help early detection and prevention of fraud.

Sensitive Data at Risk

Many of the most popular IoT devices are connected to data at rest (stationary data not currently being used). The biggest threat of insecure hardware and software is a data breach. Data breaches have littered the dark web with billions of personal records leading to identity theft and fraud for millions of Americans.

Most devices are connected to the internet through an email account, website login, or existing social media account. Additionally, these accounts may have access to credit card or bank data, usernames, passwords, and even more sensitive information.

Some types of IoT threats include DDoS attacks, DNS poisoning, data breaches, and poor encryption or other vulnerabilities.

Although the technological advancements of IoT are tremendous and could improve our daily lives exponentially, it’s critical that we also focus on securing them better before they are released into the market. Most notable breaches occurred due to email hacking. Security professionals must think outside the box and focus on where attacks are now occurring to prevent widespread abuse of vulnerable IoT equipment.

Planning for the Future

Major credit card companies like Visa and MasterCard are already preparing for the future by planning how customers will buy and sell and how best to protect the devices that control merchant transactions. Thankfully, fraud prevention technologies are constantly improving and adapting to keep up with cybercrime and its continued evolution.

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BIO: David Lukić is an information privacy, security and compliance consultant at The passion to make cyber security accessible and interesting has led David to share all the knowledge he has.

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Sikander Zaman
writing is my profession, doing this from long time. writing for many online websites one of them is scoopearth