We must anticipate and address potential fraud in the metaverse

The Metaverse is a virtual online world that people can access in a variety of ways, including virtual and augmented reality. It offers people an interactive social experience where users are represented by avatars. Users can teleport through different virtual social worlds, participate in events and transact using cryptocurrencies.

By 2026, 25 percent of people are predicted to spend at least one hour a day in the metaverse. There, they will be able to engage in activities such as work and shopping, and 30 percent of businesses will have their products and services ready for the metaverse.

The metaverse – which includes blockchains and cryptocurrencies – is still in its early stages. As its capabilities expand, it is important to consider potential threats and dangers, as the metaverse brings risks related to legislation, property, control, fraud, and threats to privacy, ethics, and security.

As researchers interested in forensic accounting and digital fraud, we have attempted to identify risks unique to the metaverse.

Opportunity or threat?

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metaverse seems to be a foray into the development of new online business models. And as such, can we predict the associated risks? Do current laws apply to the metaverse? How are we protected from scams in the metaverse?

While metaverse offers new opportunities for businesses and customers, as an emerging technology it brings with it a number of risks.

Legal issues will cover intellectual property rights, regulation of virtual assets, privacy, and gambling. Businesses considering using metaverse should anticipate intellectual property rights, especially those related to terms of service agreements and end-user license agreements.

Metaverse Scam Risks

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metaverse can bring many fraud risks such as market manipulation, cyber breaches and attacks, privacy invasion, money laundering, corporate espionage, and identity theft.

Unlike traditional social media platforms, users have no guarantee that the data they share will only be shared with those they choose to share it within the metaverse. This means that user identities can be tracked and revealed

Personal data such as biometric data may be collected through metaverse and subsequently used for marketing purposes. Organizations using metaverse must ensure that data is anonymized and users cannot be identified.

The rapid development of the metaverse has also brought risks related to cryptocurrencies, which are already subject to very little official regulation. Cheats could potentially flourish in the metaverse – and worse, become normalized as a metaverse experience.

Fraud prevention

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Risks in the metaverse can be mitigated by corporations and governments implementing controls to ensure the protection of users and administrators. These are steps that can be taken to deter, prevent and detect fraud in the metaverse.

In our research on identifying potential fraud in the metaverse, we have identified two sets of actions: the macro, which takes place at the government level, and the micro, which affects corporations.

At the government level:

Special regulation is needed for the metaverse, perhaps in the form of a new metaverse law that covers metaverse transactions and actions;

Increased oversight by government bodies such as tax authorities;

Establishing an international and global authority for metaverse oversight;

Working with businesses to share information that will reduce risks and prevent harmful use and unethical behavior and misinformation in the metaverse;

Regulators should require or encourage organizations to disclose how they mitigate metaverse risks, what resources they have, and how they protect users from identity theft, disinformation, cyber threats, and privacy violations.

At the level of individual corporations or organizations active in the metaverse, several steps can be taken:

Adopt a comprehensive internal approach across different departments (for example audit, marketing, and finance departments) to identify weaknesses in the implementation of processes in the metaverse;

Implement measures that regulate avatar behavior across platforms to ensure that users meet community standards Use artificial intelligence to combat fraud and fraud Ensure an adequate metaverse threat mitigation and response program is in place.

Boards, governing bodies, and management should be trained and able to coordinate efforts to combat the emergence and spread of crime in the metaverse. Training and education are the first steps to creating an effective metaverse anti-fraud program.

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Warm regards,
@Winy

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