Fraud as a Service: How It Works and How to Protect Yourself

Fraud as a Service (FaaS) is exactly what it sounds like: a business model for cybercrime.

It may sound unbelievable that entire businesses exist with the sole purpose of enabling others to commit fraud. And that’s not the only shocking thing: because they operate as regular businesses, they use scalable strategies and advanced technology to expand their reach in the dark web.

As fraud becomes more accessible, millions of people are at risk. The 2024 FTC fraud report found that U.S. consumers reported over $12.5 billion lost to fraud in that year alone.

What is fraud-as-a-service?

Fraud as a service is a growing cybercrime model in which a criminal sells tools, services, or stolen data to other criminals, with the sole objective of optimizing their fraudulent activity.

Another key concern is that FaaS provides criminals with technological tools and software, eliminating the need for advanced technical skills that cybercriminals used to have. This means someone with little to no technical knowledge can launch sophisticated scams, lowering the barrier for engaging in cybercrime and increasing the volume of attacks.

How does fraud-as-a-service work?

Similar to a legitimate online business, FaaS providers operate through dark web marketplaces or encrypted platforms. These providers transform traditional hacking and fraud methods into services that can be easily purchased or subscribed to. They can advertise and sell their services to novice criminals in illicit forums and marketplaces on the dark web.

This is how the FaaS business model usually works:

1. Creation of tools and data: Cybercriminals develop scam kits, malware, or steal personal information through breaches.
2. Packaging and selling: These tools are sold as subscription services, one-time purchases, or profit-sharing models, as well as the data they’ve stolen, like payment card information, healthcare records, or social media accounts.
3. Distribution of scams: Because these tools are advanced in technology, it allows the criminals to commit scams such as:
   
   • Account takeover fraud
   • Refund or online payment fraud
   • Phishing emails and texts
   • Impersonation scams or synthetic identity fraud
   • Fake job or investment offers
4. Monetization: Scammers collect payments through hard-to-trace methods like bank transfers or cryptocurrency.  
5. Ongoing customer support: These FaaS providers operate like a legitimate SaaS business, offering customer support and user reviews to ensure customer satisfaction.

As a result of FaaS operating like a legitimate business, they transform fraud into a scalable, repeatable, and harder-to-detect activity. Plus, the rise of AI and automation is accelerating this trend, allowing fraud schemes to be deployed faster and at a larger scale.

Who is at risk with FaaS?

The answer is everyone is at risk.

According to the FTC’s report, there were 2.6 million fraud reports filed and 1.1 million identity theft cases, with total reported losses reaching $12.5 billion. Data shows this increase in losses was not due to a raise in fraud reports. Instead, the percentage of victims who lost money increased from 27% in 2023 to 38% in 2024.

At the same time, the most popular scam to which they lost money was investment scams, with 46%. The second highest (26%) reported loss amount came from imposter scams. Finally, consumers reported that bank transfers or cryptocurrency were the most popular payment methods through which they lost money.1

Older adults (60+) tend to lose significantly more money per incident, while younger adults (20–29) are more likely to fall victim to and report losing money to fraud. Unfortunately, job seekers are increasingly targeted through fake jobs and employment scams. While all online users are vulnerable through email, text, and social media (which is one of the most common scam channels).

The reality is that Fraud as a Service is transforming cybercrime into a scalable industry, making scams more frequent, sophisticated, and accessible to criminals. With fraud becoming easier to commit, protecting your identity becomes more important than ever.

How can IDShield® membership help protect your data?  

Protect your private data with IDShield identity theft protection services! IDShield continuously monitors your personal information, like your Social Security Number, across credit reports, banking accounts, public records, and dark web marketplaces. If suspicious activity is detected, you receive real-time notifications.

We help protect your digital life with cybersecurity and device protection through Trend Micro’s VPN, malware protection, and parental controls; along with a password manager that manages and encrypts your passwords across multiple devices.

If identity theft occurs, you have direct access to Licensed Private Investigators who work to restore your identity to its pre-theft status. Plus, you get access to an identity theft specialist for consultations on identity concerns.

Arm yourself against cybercriminals with IDShield! Get started today!

About the author: Alicia Baquero, Senior Content Creator at LegalShield, creates informative content to help readers navigate legal and identity protection topics. She focuses on simplifying complex concepts into practical guidance for individuals, families, and small businesses. Alicia contributes to educational content for the blog and sales enablement content for B2B.

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