This article first appeared in Digital Edge, The Edge Malaysia Weekly on December 11, 2023 - December 17, 2023

Christmas may be coming early for Southeast Asian fraudsters, as the shopping season opens numerous opportunities to make a quick buck. Amid the seasonal rush, consumers and brands are at an alarming risk of scams and fraud. Exacerbated by artificial intelligence, cyber fraud can drain brands of all their Christmas cheer — and dollars — unless action is taken.

This year’s shopping season looks set to be a big one. Christmas spending is set to skyrocket across Southeast Asia this year, with research showing that most consumers intend to increase or maintain their budgets for online shopping compared with 2023.

However, increased budgets and last-minute rushes also create more opportunities for fraudsters to strike and take advantage of festive goodwill. Last-minute shopping exposes consumers to theft of personal information, credit card data and more. Malaysia has already experienced a significant increase in online scam cases between 2020 and 2022, with the total number of fraud-related complaints rising by 100%.

Worrying reports have emerged globally around the accelerating advancement of artificial intelligence. AI can now mimic real identities either through written communication or voice, compromising passwords and account security. This can dupe even the most vigilant of consumers.

Evading online fraudsters can be achieved with certain preventative measures. Mobile authentication apps can help bypass fraud in the instance of mobile-phone number compromise. In the event of a successful scam, using a credit card instead of a debit card also makes the process of recovering any lost funds much easier.

Last but not least, staying abreast of proliferating phishing scams, either via email or WhatsApp, will help consumers learn how to recognise a suspicious message.

Consumers are not the only ones worried at this time of year, though. Businesses and brands are also highly susceptible to increased fraudulent attacks during the holiday season. At this time, online retailers face various advertising fraud scams that can have a significant impact on their performance and revenue.

Ad fraud usually takes the form of AI or automated bots flooding an online advertising campaign, grossly inflating either the number of clicks or impressions received. As a result, advertisers are misled into thinking their ads have been viewed more than they have, leading them to pay for non-genuine user engagement.

Malicious actors may load users’ browsers with fake cookies, taking credit for sales or conversions they did not influence.

The results of these attacks can be significant for businesses’ bottom lines. In high season, when advertising spend is peaking, brands stand to lose huge chunks of their marketing budgets to interactions with non-existent or irrelevant audiences.

Ad fraud also leaves campaigns with false performance metrics, resulting in misguided strategic decisions and wasted resources. Brands may also see falling sales if the fraudulent ads divert genuine customers.

Tackling adversity such as ad fraud is daunting, but there are detection tools that businesses can use, such as those that monitor campaign performance. Collaborating with reputable advertising platforms and implementing stringent verification processes can also help safeguard retailers against ad fraud during crucial high-spending seasons. Businesses must also continuously monitor campaign data and metrics to identify irregularities or suspicious patterns.

They may also want to employ third-party ad verification services to independently validate the legitimacy of ad impressions and clicks, as well as the traffic quality. Anti-fraud technology increasingly uses advanced AI solutions to analyse patterns, detect anomalies and identify potential fraud in real-time. These can help organisations stay ahead of evolving threats in line with fraudsters’ evolution.

Beyond technological solutions, it is simply being educated about and aware of ad fraud. This, in tandem with better industry collaboration, will help businesses to fully understand the threats they face. By mitigating fraudulent activities, both brands and consumers will be free to enjoy their Christmas cheer.

Chadwick Kinlay is chief marketing officer at TrafficGuard, an Australia-based digital ad verification and fraud prevention platform

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