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The increase in consumers utilizing the soft-credit checks of BNPL providers needs to be super-vigilant this festive season. Fraudsters and scammers have united to bring chaos to the festivities of Christmas cheer. Online fraud has exponentially increased as more consumers adjust to enforced restrictions. Digital banking and online shopping circumvent these inconveniences while predatory charlatans hone new skills to take advantage of vulnerable users who are not used to the vagaries of technology. 

     BNPL fraud has two distinctive features. 

Firstly, an “account takeover” occurs when scammers gain access to an existing BNPL account and make unauthorized purchases. This fraud is facilitated by either lax attention to identity verification or through the checkout process. 

     Secondly, there is a “fake account opening” scam. Fraudsters steal their marks’ identification, using these details to open a BNPL account, achieved when BNPL providers use the methodology to determine creditworthiness using propriety algorithms. Alternatively, they can do a soft credit check, missing ket identifiers and indicators such as an email or physical address that doesn’t correlate to the defrauded applicant’s.

     This year, due to the globally unprecedented socioeconomic events that have disrupted everyday life, it is even more important to be vigilant about personal security, particularly with private banking and BNPL accounts and applications. For example, in the United States, it is forecast that 45.1 million consumers, or roughly 30% of all holiday shoppers, will use a BNPL to shop. 

     Concurrently, many BNPLs are amid multi-billion dollar mergers and acquisitions, introducing new, more security-centric products to their customers while sharing their databases with their new owners. However, this increased BNPL activity gives scammers more opportunities to “cheat the system.”  It is, therefore, incumbent upon BNPL providers and merchants to protect the consumer their client by implementing failproof safeguards .against fraudulent activity. 

     However, if BNPL providers fail to execute effective safety measures for their clients, they are at significant risk of losing their clients to conventional payment methods such as credit cards. Inaction to address fraudulent behaviors would see the demise of BNPL and a return to the stringency of tighter credit checks with high-interest rates. BNPL is the antithesis of credit card consumerism; their main attraction being buy -now and pay later, hence the acronym. It would take consumerism back decades, as 37% of BNPL consumers have specifically chosen their service to avoid interest payments explicitly. 

     Currently, BNPLs can successfully navigate their way through this frantic, festive time. They are fully cognizant of fraud, mismanagement, and scandal that their innovative payment system has. Inactivity by any BNPL would deal these FinTech upstarts a devastating blow. Most BNPL mergers and acquisitions have been for their client base, not their profitability, as most run at a loss. Instead, BNPLs would dissolve, credit cards returning with interest-bearing solutions d preventing further churn. 

     The only real solution for BNPLs is to avoid any whisper of fraud mitigation by maintaining customer confidence and loyalty is to prevent financial malfeasance. These simple actions will beat credit cards at their long game while enabling BNPLs to continue developing, merging, and giving consumerism a continued boost through these challenging times. 

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