Capital Group Financial Advisor: Active Investing in Japan

Many stock markets around the world offer active managers room to generate superior returns. Among them, Japan stands out. Its equity market appears particularly inefficient. Reforms are also shaking up the once stagnant economy, creating new winners and losers in the corporate sector. That said, stockpicking still demands skill and discipline. We believe that managers will need nothing less than exceptional research and a long-term perspective to come out ahead.

Prime Minister Shinzo Abe’s reflationary policies have brought Japan’s stock market to a level of health not seen in decades. Even with the pullback earlier this year, the TOPIX has gained more than 70% in Japanese yen terms since end-2012, when ‘Abenomics’ started raising hopes for Japan’s economic recovery. Investors are rightly interested in gaining exposure to Japan. But how they do so matters.

Adopting a passive strategy may seem attractive. An exchange-traded fund, for instance, would simply track a stock market index in Japan. But why should investors settle for market returns? Japan has traditionally been a stock picker’s market, and it still is. Active managers that are adept at identifying opportunities and managing risks stand a good chance of beating the index over time. The sheer size of Japan’s stock market makes it a fertile hunting ground. It is the third-largest in the world by market capitalisation (US$5.2 trillion) and comprises more than 3,800 listed companies. But there are more reasons why conditions in Japan favour an active approach.

Information advantage

Japan’s stock market appears highly inefficient. Mispricing opportunities can be captured by active managers armed with superior research and insights. What drives stock market efficiency? Research coverage is key. The more analysts there are following a company, the faster information is likely to be shared. In that respect, Japan trails other developed markets like the US and UK significantly. On average, 12 analysts follow each company in the Nikkei 225 index, compared with 22 for the S&P 500 Composite Index and 21 for the FTSE 100 index.1 Research coverage tends to be even thinner for small- and mid-cap companies in Japan (see Exhibit 1). After the global financial crisis, many securities houses cut their research in this space to focus on larger companies instead. Within the electric appliances industry, for example, as many as 12 major securities houses track conglomerate Hitachi. But just two follow commercial kitchen equipment maker Hoshizaki.

Small firms, big reach

Japan’s small- and mid-cap sector is also home to numerous quality companies with leading positions in niche industries. This means there are ample opportunities for extensive bottom-up research to pay off.

Hoshizaki is a case in point. It receives little analyst coverage, yet it dominates the market for ice makers both domestically and abroad. Its energy-saving technology is a key competitive advantage as it eyes a bigger slice of the market for other appliances like refrigerators.

Likewise, few investors may have heard of Sysmex. But it is the world’s leading supplier of blood tests, ranking above healthcare giants such as Abbott. Over the years, Sysmex has gained market share with its highly efficient medical diagnostic tools and is pursuing further growth across various geographies and product lines.

Many small- and mid-cap companies trade at a discount to the market, making them seem even more attractive. But it pays to be careful. Certainly, some companies are undervalued because the market has overlooked them. But there are also those that simply have poor prospects. Active managers make a real difference when they can separate value finds from value traps.

Abenomics effect

In recent years, Abenomics has become a chief driver of investment opportunities in Japan, across companies large and small. Part of the agenda involves long-term reforms that are difficult to price into the stock market. This makes Japan a prime venue for forward-looking stock pickers that can identify companies poised for change.

Already, new corporate governance measures are starting to have an impact. They take aim at low profitability, ineffective boards, and other forms of poor corporate behaviour that have undermined investor confidence for years. Most companies that pledged to adopt these measures have been rewarded by the stock market. But anticipating which companies will do so is no mean feat.

Local insights are critical. Knowing a company’s financials is one thing, but understanding its culture and focus is quite another. It takes on-the-ground research, including regular meetings with top executives, to discern management’s views on Abenomics and detect potential changes in corporate direction.

Some companies that took steps to shape up were once seen as unlikely reform candidates. Fanuc, a world-leading industrial robot maker known for its reticence, surprised the market when it raised its dividend payout ratio and proposed share buybacks last year.

Still, overhauling corporate mindsets across Japan will take time. Its corporate governance still lags behind other developed countries. The discovery of accounting irregularities at electronics group Toshiba last year is a reminder of the gaps that exist. Active managers that can harness research to spot – and avoid – questionable firms have a valuable role to play.

Risk management

Indeed, limiting losses matters. But a passive approach provides no protection in this regard: investors tracking an index fully capture the market’s decline.

Passive investors are also vulnerable to unintended exposures. In February 2011, for example, investors mirroring the MSCI Japan Index would have had a 1.43% exposure to Tokyo Electric Power (TEPCO), whether they were positive about the electricity provider or not. It was then the ninth-largest company in the index. In March 2011, a massive earthquake set off a nuclear disaster at TEPCO’s power plant in Fukushima. As the company sank into the red, its share price plummeted. Today, TEPCO makes up just about 0.19% of the index.

In contrast, an active strategy can better protect against downside. The most successful managers consciously manage their exposures and invest according to their strongest convictions – not the index. They have the flexibility to avoid companies in the index with lofty valuations, or invest in non-index companies that show resilience. They can also hold cash to preserve capital during downturns. In fact, it is often during broad market declines that these managers deliver exceptional value.

Selecting an active manager

Historical data present a compelling case for long-term active investing in Japan. Over five-, 10- and 15-year periods, the median return from Japanese equity active managers handily outpaced the TOPIX (see Exhibit 2). Capital Group’s Japan Equity strategy also beat the TOPIX to rank within the top quartile of the universe over its lifetime.

Of course, not all active managers beat the index in the long term. It is therefore crucial for investors to identify those with the qualities to come out ahead.

Strong research skills are a prerequisite for success, especially in Japan. Given the stock market’s inefficiency, quality research goes a long way towards uncovering attractive opportunities.

This is why we commit huge resources to mine for insights on the ground. Our industry analysts research companies from the bottom up and maintain frequent communication with managements. They monitor not just companies based in Tokyo, but also lesser known firms in other parts of Japan.

The Capital Group Inc Singapore: A tale of two US economies

For the US, the second half of 2016 was a tale of two economies, with a strong domestic economy and weaker industrial sector. These trends are largely unchanged, but are now set against a very different political backdrop. While the impact of Donald Trump’s election as US president remains unclear, the improving economy should be supportive of US equities in 2017.

One economy, two inflation levels

Robust US consumer spending continues, with indicators showing encouraging data for areas such as retail, housing and auto sales. However, this sits alongside a relatively lacklustre industrial sector, driven by two factors:

1. Weak export growth because of sluggish non-US economic activity and a strong US dollar.
2. The collapse of the US energy sector, which followed the sharp decline in energy prices.

This split economy subsequently led to different levels of inflation in services and goods. As shown in the first chart below, service prices (which are largely determined by domestic economic conditions) have been rising around 3%, while goods prices (which are more a function of global economic conditions) have been flat or falling.

What this means for the Fed

The bifurcated nature of the US economy presented the US Federal Reserve (Fed) with a challenge: how to account for the fact that one half was growing at a rate better than expected while the other was showing the opposite trend. In response, the Fed chose to raise interest rates in December, while its rate-setters forecast further rises in 2017, contingent upon positive incoming economic data. We anticipate, however, that if additional rate rises do take place in 2017, these will be small and the ‘lower for longer’ scenario will remain intact.

Strengthening macroeconomic conditions

In a positive development, the two headwinds facing the industrial sector in 2016 have abated. Energy prices have rebounded, bolstered by the agreement between OPEC and other oil-producing nations to cut oil production. At the same time, the US dollar has weakened since the beginning of the year. This should lead to the industrial sector posting stronger growth rates in 2017, and in turn allow overall US economic growth to reaccelerate to a rate of 2%-2.5%, which we saw after the recession ended in mid-2009.

The Trump factor and policy uncertainty

The big change for the US has been in the political arena. President Trump’s bold proposed policies have already affected markets in anticipation of their implementation, but much remains uncertain.

If Trump’s fiscal policies were to be fully implemented, we could see stimulus reaching a level of around 3% of GDP, which may be problematic in the longer term. US unemployment is now below 5%, which is what most economists consider to be the economy’s natural rate. As the unemployment rate has moved further below 5%, wage growth has accelerated in a typical way. In past cycles, wage growth has accelerated every time the unemployment rate has fallen below 4%. If the economy does 3 indeed reach the 2%-2.5% growth rate, and there is a further 1%-1.5% of additional stimulus in 2017, the unemployment rate would likely continue to fall further, triggering a further acceleration in wage growth. This would result in a stronger economy in 2017 as consumers benefit from wage growth, but it may also cause the Fed to respond more aggressively than what the markets have currently priced in, by raising interest rates higher and faster.

Higher US interest rates would likely lead to higher bond yields, albeit within limits. Despite rising since the election, real yields have remained very low, at just above zero. This seems inconsistent with an expected economic growth rate of 2%-2.5% plus additional stimulus. These low yields are likely a by-product of policies implemented by other central banks around the world. Quantitative easing, by which central banks create money to purchase bonds, has directed vast volumes of money to the US Treasury market, driving bond prices higher and yields lower. While the US may have ceased its bond-buying programme, other markets, including the EU, have continued theirs. So while we can expect higher US Treasury yields, there will probably be a limit to how high they go, making them unlikely to pose a risk to the economic activity of 2017.

The costs of economic stimulus

Before the presidential election, the Congressional Budget Office had forecast that the federal debt-to-GDP ratio would increase over the next decade, reaching around 80% by 20251. However, if Trump’s proposals were fully implemented, that ratio would exceed 100% during that period2, reaching the same levels as in countries affected by the European debt crisis countries. If the growth in US debt continues along this trajectory, concerns about debt sustainability could increase over the next decade. This, coupled with a less favourable supply-and-demand balance within the Treasury market, could ultimately put upward pressure on yields. However, these are potential areas of concern that will have an impact beyond 2017.

The other key area of concern for the US economy is Trump’s policies on trade. There are currently trillions of dollars of goods that flow into and out of the US economy on an annual basis. Should significant tariffs on imports be levied, US consumers would lose purchasing power, while other countries could implement tariffs in retaliation. The result would be much higher prices for US consumers and so reduced consumer spending, as well as dampened export growth. Finally, there are well-entrenched global supply chains that rely on the relatively free movement of goods between countries. To disrupt those supply chains would no doubt have a negative impact on economic activity. Again, however, none of these outcomes are likely to play out in 2017, but rather in 2019 or 2020.

Realistic expectations

There are significant obstacles that President Trump would have to face should he push for his full proposed stimulus and policies. Firstly, many of the policies would require congressional approval, which is not guaranteed. Even if they were approved, it would then take time to implement them. For example, a large infrastructure spending package would take a significant amount of time to execute as projects have to be identified and resources mobilised. The same goes for trade policies.

A supportive backdrop for US equities remains despite uncertainties

The US equity market currently appears fully valued, with the price-to-earnings ratio at a level that has rarely been exceeded. As a result, we believe a reasonable expectation is for total return over the next 12 to 18 months to be driven by a combination of earnings growth and dividend yield.

Fortunately, with an economy that is improving, an industrial sector that is recovering and the possibility of corporate tax cuts, the outlook for US earnings is positive. In our view, it is also reasonable to expect solid earnings growth over the next 12 to 18 months and, if you factor in dividend yield on top of that, there is the potential for positive equity market returns as we go through 2017 and into 2018.

Investing Review: Entering the World of Investment

Why people invest? Investing creates more money, which in turn, helps you to fund your lifestyle and plan for financial hardships. When you invest, you devote your time, resources or effort to some specific endeavor with the expectation that it will generate a return in the future.

Entering the world of investment isn’t easy, you need to have a certain level of knowledge and skill because taking your first step in the market without knowing what you’re doing and where you’re heading is a very dangerous move. Be sure that you are well-informed, there’s a huge amount of information available on the Internet to make yourself equipped before investing in an institution.

There are various ways to invest – stocks, bonds, certificate of deposit and mutual funds are some form investments you can choose from, just be careful of investment scams. But before venturing your way down the road of investing, consider learning the basics here.

Your debts, remove them first.

Before starting to invest, make sure that you don’t have high-interest debt existing. Why? Because all the effort you’ll put in investing will be useless if you don’t take necessary action about it. It would be better paying your debt first as such would negate all your efforts in investing.

There’s an active and passive management in investing.

There are two main methods you’ll encounter when you are stock investing – active and passive management. Active investing involves choosing your desired investment type while a passive investing involves a third party. Stock investing is commonly referred as active investing, but this type of investing strategy doesn’t have favorable outcomes at all times.

Analyze the situation before investing.

Remember, investing isn’t a casino slot machine lever where you can magically gain a huge amount of money once you get lucky. When you are investing, years of patience and discreet assessment of a company are required before you can finally reap a good harvest.

In line with this, when you commit your money to something you don’t understand then you are gambling with the possibility of losing the money you invested. It is necessary that you do research before investing in a specific company and do not immediately believe the opinions and speculations of another person. If your friend told you that a certain company will definitely boom in the following years, make sure to do a little research about the company first and its performance before throwing your hard-earned cash at it.

Planning and setting financial goals.

Investing is a long careful process and you need to ask yourself a lot of questions before undertaking the road to investing.

• What are your financial goals?
• How long is your time frame in investing?
• What type of investment will you choose?
• How much money are you willing to invest to achieve your financial goals
• What short-term financial expenses do you have?
• Will you have to retire using your investment?

Learn how the stock trading works.

After establishing concrete financial goals, you can now learn how to start making your investments. In mutual funds, call a fund company and request to open an account for you. In dealing with stocks, New York Stock Exchange (NYSE), the American Stock Exchange (AMEX), and the Nasdaq Stock Market are the major US exchanges. Stocks are traded on various stock exchanges, they all have a different mode of trading but the process of buying and selling shares are all the same.

Buyers and sellers connect during stock exchanges. The buyer will make a “bid” (the share price they are willing to buy), while seller “ask” (the price of the share they are willing to sell). The “spread” is the difference between the two, which are often goes to the professional who handled the trade exchange.

The most common way to buy a stock is through brokerage accounts. There are full-service workers and there are discount brokers who offer their service at a not too expensive price.

Cash account and margin account and where you should be.

In using a brokerage account, you can use cash account or a margin account. In a cash account, all transactions are done by using the only money you actually have. While a margin account, let’s you buy a stock with borrowed money from other people’s cash. The latter can be quite appealing but there’s risk taking that road.

Brokers will usually endorse margin accounts, as those will create more commissions for them. Though borrowing money will increase your chances of buying more stocks, it will also take you to risk because you’ll have to pay all that margin money at some point. Therefore, margin accounts are great if your investments are soaring high in value but can cause uncertainty if it isn’t. This type of investment is not advisable for beginners like you.

Direct Investment Plans (DIPs) and Dividend Reinvestment Plans (DRPs)

If you aren’t ready for a brokerage account then consider one steadier way to buy stock. Investors call it as Drips. DRP’s and DIPs are offered by corporations that allow shareholders to buy stock directly from them at low cost or fees. Not every company offers this kind of opportunity but they are great for beginners who can only invest small amounts of money.

Investment Tips: Escape Plan for Your Debt Problem

Wrestling with debt for years with no success? It certainly is an exhausting thing to struggle and keep your head above water. A debt isn’t something you can brush off. It is like a recurring nightmare where Freddy Krueger keeps on haunting and chasing you even on dreams. And now, it is time to take back your life and follow these debt escape plan I prepared for you.

Seek help from family and friends

This will be my first suggestion. Talk to a friend or relative that has a financial capability to help you pay your debt. But make sure to have a formal agreement on paper regarding payment terms and conditions so that it wouldn’t cause arguments and disputes in the future.

Pay higher than the minimum monthly payment

One of the faster ways to escape your debt is to pay higher than the minimum monthly payment. Paying only the minimum cash required each month will just lengthen your misery so pay as much as you can afford. If you have spare money allotted for your dine-outs then why not try eliminating that luxurious thing and add it up to your debt payment? Sacrificing such luxuries to quickly pay off your debt is not a bad thing.

Sacrificing savings and investments

Why not withdraw your savings and investment in order to slowly pay off your debt? It isn’t a bad thing if you’ll consider it carefully. If your savings and investments are making less than the cost of your debt, it might appear unwise but it isn’t bad to pay off your debt first using any possible source of money you have.

Snowball method for credit card debt

A credit card is such a great help with many benefits. It can help you in buying and save money but the constant uncontrolled use of it can ruin your finances. Here are two credit card debt escape plan recommended for you:

Plan #1: First, pay the required monthly payment on all of your cards except for one. Then pay as much as you can afford on that one card so you could easily settle your balance in there quickly. Don’t settle on paying for the minimum required payment only, it will just prolong the agony. Once the balance in that particular card reaches zero, try the same method for the next credit card balance you have on your list.

Plan #2: Credit card balance transfer is one alternative way you can use to wisely pay your debt and save money. This involves the transfer of the balance from one credit card account to another.  Many credit card companies allow this process in most cases. All you have to do is choose the lowest interest rate you have on your cards and transfer the remaining balance from other cards into that one. Transferring a higher interest bill to a low-interest card is one excellent move that will surely save you a lot of money in interest. If the outstanding balance is too large for that low-interest card, consider Plan #1.

Using cash value life insurance

Nowadays, life insurance is a must have especially if you have a family that relies on your income. This will become of great help to you and your family if you accidentally die. However, having a debt can also become a burden to you and your family in the future. If your life insurance company provides cash value, why not borrow from your own money? In this case, you’ll have longer terms to pay for the loan with interest rate to avoid interest scams less than commercial rates.

Apply for a Home Equity Loan

Owning a home is one potential source of extra cash. You can apply for a Home Equity Loan (HEL) to pay off your debts. The maximum loan amount you can acquire will be based on the current market value of your home assessed by an appraiser. Don’t be a reckless borrower and make sure that you’ll repay the loan or else your home could be sold to pay off the remaining debt. Your house is at stake here!

Apply for a loan using your 401(k) retirement savings plan

401(k) plan loans are one of the better ways to pay off your debt. If you have taken part in your company’s 401(k) retirement saving plan then you may benefit from its loan feature where you could borrow roughly half of the accounts value. Consider this carefully though loaning using this plan is much more reasonable as it gives low-interest rate and that every dime in interest paid on this loan goes directly to your 401(k) account, it also has some downsides. Make sure to do some research and raised any questions before applying.

Renegotiate

Nothing works for you on the early escape plans above? Want to file a bankruptcy? No, not yet. There’s one more solution, try to renegotiate terms. Use your ace card which is to threaten them of filing bankruptcy since you don’t have any other solution to repay your debt. This will force them to work things out with you – ask for a lower repayment term or even lower interest rate. Oftentimes, they prefer this kind or settlement rather than filing a bankruptcy.

Bankruptcy is your last resort

File a bankruptcy. This is your last and only resort if renegotiation wasn’t become an option and if you really don’t have the resources to pay your debt. However, you should be fully aware that filing a bankruptcy has some drawbacks.

Cyber Security: Machine Learning and Big Data Know It Wasn’t You Who Just Swiped Your Credit Card

You’re sitting at home minding your own business when you get a call from your credit card’s fraud detection unit asking if you’ve just made a purchase at a department store in your city. It wasn’t you who bought expensive electronics using your credit card – in fact, it’s been in your pocket all afternoon. So how did the bank know to flag this single purchase as most likely fraudulent?

Credit card companies have a vested interest in identifying financial transactions that are illegitimate and criminal in nature. The stakes are high. According to the Federal Reserve Payments Study, Americans used credit cards to pay for 26.2 billion purchases in 2012. The estimated loss due to unauthorized transactions that year was US$6.1 billion. The federal Fair Credit Billing Act limits the maximum liability of a credit card owner to $50 for unauthorized transactions, leaving credit card companies on the hook for the balance. Obviously fraudulent payments can have a big effect on the companies’ bottom lines. The industry requires any vendors that process credit cards to go through security audits every year. But that doesn’t stop all fraud.

In the banking industry, measuring risk is critical. The overall goal is to figure out what’s fraudulent and what’s not as quickly as possible, before too much financial damage has been done. So how does it all work? And who’s winning in the arms race between the thieves and the financial institutions?

Gathering the troops

From the consumer perspective, fraud detection can seem magical. The process appears instantaneous, with no human beings in sight. This apparently seamless and instant action involves a number of sophisticated technologies in areas ranging from finance and economics to law to information sciences.

Of course, there are some relatively straightforward and simple detection mechanisms that don’t require advanced reasoning. For example, one good indicator of fraud can be an inability to provide the correct zip code affiliated with a credit card when it’s used at an unusual location. But fraudsters are adept at bypassing this kind of routine check – after all, finding out a victim’s zip code could be as simple as doing a Google search.

Traditionally, detecting fraud relied on data analysis techniques that required significant human involvement. An algorithm would flag suspicious cases to be closely reviewed ultimately by human investigators who may even have called the affected cardholders to ask if they’d actually made the charges. Nowadays the companies are dealing with a constant deluge of so many transactions that they need to rely on big data analytics for help. Emerging technologies such as machine learning and cloud computing are stepping up the detection game.

Security and Risk Online: 5 frauds you need to beware of

The recent demonetisation move in India has pushed us to move to a cash-free economy. This shift, which would have otherwise taken three years, is now expected to take just three to six months. Digital payments have also recently hit record transactions.

With digital payments witnessing record transactions and more and more people joining the cashless bandwagon, there is an obvious question on everyone’s mind: are digital transactions safe? The pace of the development and integration of new technologies is much faster than the pace at which security protocols and defence mechanisms are implemented. This is what makes these technologies vulnerable to cyber-fraud. For example, 3.2 million card details were stolen in October in India – making the theft India’s biggest data breach.

Members of India’s new digital economy need to be aware of the vulnerabilities in the digital and mobile payment systems. Here are the key ways in which digital payments can be breached.

1. Key Logger: Just like tap dancers are strongly aware of how and when their tap shoes strike the floor, a key logger is a software that records the key-strokes made by the user on the keyboard. Static passwords like 3D PINs or banking passwords, that are entered regularly, are vulnerable to cyber-fraud through a key logger, as it can record regularly typed in passwords without the user’s knowledge. Using a dynamic PIN is a smart solution to the breach caused by key loggers. It is also beneficial to use apps that have an in-app secure swipe instead of the ones that require the keying in of an OTP.

2. Social Engineering: Those calls that seem to come from the bank might not really be from the bank itself. Credit and debit cards are used at many online merchants and marketplaces. Even if these online transaction use OTPs and CVVs, someone may call the cardholder and pretend to be a representative of the bank, acting as if an online transaction needs to be confirmed, and subsequently ask the cardholder to share the the received OTP. When the OTP is disclosed by the cardholder, a fraudulent transaction can take place.

3. OTP Pop-Ups: As One Time Passwords have limited time validity (in minutes), they are believed to be secure. Although OTPs mostly appear as pop-up notifications on mobile phones. These pop-up messages are clearly visible, even if the mobile phone is locked. This means that the OTP can be easily accessed without the permission of the user, making the transaction open to being breached.

4. OTP Accessibility: Although an OTP is essential, the medium through which it is delivered is of utmost importance. Most of the times, a One Time Password is sent as an SMS. The problem with this is that many apps can read SMS messages. This means that if an app is malicious it can misuse the OTP that has been received. Therefore, users should be aware of what privileges they give to the apps on their smartphone and also look at reviews and number of downloads of the apps they choose.

5. EDC Machines: Even with a second-step PIN verification, swiping a card on an EDC machine is not as safe as it seems. EDC machines are susceptible to breach and a compromised machine can copy the details of the cards when swiped. Most debit and credit cards have a static PIN, and even these PINs can be stored in compromised EDC machines. A breach like this can give easy access to the personal data of cardholders to fraudulent groups. A dynamic PIN for physical credit or debit cards could be a strong safeguard against compromised EDC machines.

As there are many threats and vulnerabilities with digital payment systems, we need a system that goes much further than regular security standards. This digital payment system should have more than two layers of security so that it is virtually impenetrable. The system should be planned in such a way that each layer both independently stands by itself and also smartly integrates with the overall security structure. From requiring a password just to access the digital payment system to not needing to key in a PIN, this system should have multiple security checkpoints so that only the authorised user can successfully, yet easily, make payments through it.

Online Security: Increase in Cybercrime to Boost the Global Antivirus Software Package Market

Technavio analysts forecast the global antivirus software package market to grow at a CAGR of close to 10% during the forecast period, according to their latest report.

The research study covers the present scenario and growth prospects of the global antivirus software package market for 2016-2020. The report also segments the market based on end-users into home users and corporate users, with corporate users accounting for over 60% of the market share in 2015.

According to Ishmeet Kaur, a lead analyst at Technavio for enterprise application research, “Antivirus software packages are expected to gain maximum traction in APAC during the forecast period as enterprises in this region are highly dependent on the Internet and wireless technologies, which are more vulnerable to data theft and cyber-attacks.”

Technavio ICT analysts highlight the following three factors that are contributing to the growth of the global antivirus software package market:

• Increase in cybercrime
• Rise in number of online transactions
• Growing dependence on Internet

Increase in cybercrime

Cybercrimes include malware, hacking and denial of service (DoS) attacks, computer viruses, fraud, identity theft, harassment and threats, and phishing scams. With cyber-attacks becoming more complex and sophisticated, the demand for antivirus software is growing. Mobile devices are becoming the most preferred devices for web browsing, e-mailing, making online purchases, accessing social media, and downloading apps. Therefore, they have become potential targets for cyber-attacks as they are increasingly being used to perform personal and business tasks by enterprises and individuals.

The increase in the number of cyber-attacks has raised awareness and fear among organizations with respect to the different security risks. For instance, in 2015, enterprises in the US alone, faced an annual loss of more than USD 525 million due to cybercrime. Most of the losses were due to malicious code and DoS attacks. This is compelling organizations to adopt antivirus software packages.

Rise in number of online transactions

Online transactions are gaining prominence among individual consumers because they are very easy, quick, and convenient. However, these banking and e-commerce transactions are most vulnerable to cyber-attacks. Therefore, vendors in the market are providing advanced features in their antivirus software packages to make online transactions secure and prevent fraudulent activities.

The availability of multiple online shopping websites, attractive offers, and a variety of choices are factors that are encouraging users to shop online. Users are increasingly using the Internet for financial transactions because they are quick and convenient.

“Security threats such as identity theft and phishing are on the rise due to an increase in the number of online transactions. Thus, the need for antivirus software packages is increasing with the rise in online transactions,” says Ishmeet.

Growing dependence on Internet

The worldwide use of Internet is growing at an exponential rate, with the number on internet users exceeding 3 billion in 2015, which was more than six times the number of Internet users in 2000. This is due to the spread of education and developments in technology ensuring better connectivity.

The Internet has penetrated the lives of individuals from all walks of life. People are increasingly using the internet for everyday activities and to stay connected because of which they end up posting a lot of personal information on the Internet. The increased dependence on web applications has made people vulnerable to identity theft. Cases such as phishing and data theft are on the rise, and new forms of attacks are emerging. Therefore, it has become essential for end-users to adopt antivirus software packages to protect critical information from security threats.

Online Security: Top Payment Options for Online Casinos

Finding your favorite casino games online is easy to do considering the loads of options to choose from. However, in order to make the most of your gambling experience online, it is ideal that you find a casino that offers you the safest, most reliable payment options. Security is an important consideration when trying to choosing an online casino. To make it easier on you, we’ve compiled a listing of the top payment options available through online casinos today. Look out for these options as they ensure your security comes first and that you have the best online gambling experience.

Credit Card

Credit is probably the most widely used form of payment across all online casinos. The great thing about credit card payment options is that you’ll find them at all casinos, so you’ll be able to play at any casino if this is your preferred method. Unfortunately, credit cards aren’t always the most secure option, as fraudulent behavior is often a cause for concern. Of all credit card options, we recommend Visa as it is accepted worldwide and is the safest of the bunch.

PayPal

Conveniency is at the core of PayPal’s business model, allowing for easy money transfer online. PayPal was founded in 1998 with the intention of making online shopping easier and hassle-free. Users of PayPal are now able to consolidate their multiple banking accounts under one convenient roof, so that they can transfer money or make payments through multiple accounts. For online casino members, the availability of PayPal makes their experience all that much more convenient. It’s much easier to play and gamble when you don’t have to worry about constantly having to rely on one single account. Additionally, PayPal is extremely secure and employs the strictest technology to prevent fraud and other suspicious behavior. Thus, it is no wonder that casino sites that accept paypal, listed on paypal-casinos.co, are a favorite among online casino goers. If we had to go with one option, PayPal would be our pick.

Neteller

Known as the leader in the e-wallet industry, Neteller is a highly reputable and widely used form of payment. Neteller makes it easy to transfer funds for services and is used as a virtual wallet for those who prefer veering away from banks. Knowing that you won’t have to plug in your account number in order to make a payment is a source of comfort for many, and Neteller allows for that. It is a convenient payment option that has become widely recognized within the online casino industry. It is relatively easy to come across, especially within the Canadian casino space online.

Visa Electron

Debit is also a common form of payment available on many online casinos worldwide. Visa Electron is the most reputable of the lot, ensuring security for all those using it. The card is easy to use and it serves as a sister card to the Visa debit card. The only difference between the two is that Visa Electron prevents the player from overdrawing, so they must be sure to have enough funds available when using their card. Most online casinos offer Visa Electron as a payment method. We highly recommend Visa Electron if you like to use your debit card and are looking for a secure form of debit.

These payment options are the most reliable options when making payments through online casinos. It is important to choose an option that is most convenient for you and keeps your security a priority. Always choose a trusted option so that you can make the most of your online casino experience.

Coalition Against Insurance Fraud: Election fallout ripples through anti-fraud world

Changes at the state and federal levels could affect enforcement

While the shock of the national elections continues to be felt, the Coalition is sizing up the likely impact on fraud-fighting.

The biggest concern is whether the Trump administration will continue the federal government’s aggressive stand in combatting healthcare fraud. FBI investigations and Department of Justice prosecutions have helped set records for arrests, convictions and financial recoveries in the last eight years.

Another potential concern is whether repealing the Affordable Care Act will gut anti-fraud programs that were part of the original bill. Medicare has much more capacity and authority to crackdown and prevent healthcare fraud today. Its ability to shut down scams quickly and use the latest technology such as predictive modeling could be in jeopardy.

Republicans also likely will push for interstate sales of health insurance. We’ve repeatedly warned that such an unregulated system will spur scam artists to sell fake policies to unsuspecting consumers.

Another potential casualty could be the Healthcare Fraud Prevention Partnership, an alliance of more than 60 private insurers and public agencies.

The partnership’s data-sharing program has helped save more than $260 million for healthcare payers. It would be foolish not to continue, but the program operates at the whim of the administration and HHS secretary. That’s one reason we advocated writing the program into federal law, but it’s too late for that now.

As for state elections, Wayne Goodwin, the insurance commissioner in North Carolina, lost his election. He’s a strong supporter of anti-fraud measures. Goodwin sponsors an effective fraud bureau, and chairs the NAIC Anti-Fraud Task Force.

The change of governors and insurance commissioners in other states, such as Delaware, also may affect law-enforcement efforts to combat fraud.

We’ll continue analyzing the federal and state results. We’ll report developments as they emerge. In the meantime, the Coalition stands ready to work with the new office holders to advocate strong measures that effectively combat insurance fraud.

Coalition Against Insurance Fraud: Insurers from Mars, fraud bureaus Venus?

More common ground needed on reporting, acting on suspected scams

I just returned from the NAIC’s summer meeting. It included the antifraud task force meeting, attended mostly by directors of state insurance fraud bureaus. I also met with insurer SIU directors before the NAIC event.

I felt as if I’d entered a time warp. Discussions at both meetings reminded me of a breakout session I chaired at a Coalition summit more than a decade ago on the status of insurance fraud fighting. SIU directors and fraud bureau directors both attended.

The main discussion by insurers then was about the “black hole” of information sharing. Insurers said they send cases to fraud bureaus for investigation, and never hear a word back. The fraud bureaus contend insurers send them weak cases, or ones not well-vetted.

That’s what I heard last week as well. Insurers seemed at a loss about what happens to their cases they refer to fraud bureaus. And, several fraud bureaus grumbled about the lack of good referrals from insurers.

Insurers and fraud bureaus clearly need better dialogue so everyone fully understands each other’s needs.

One fraud bureau chief talked about how a few insurers in his state haven’t reported a suspected scam in years, even though reporting is mandatory. Are those insurers doing such a good job that nobody’s trying to scam them anymore? Doubt that.

Insurance-fraud laws broadly define the crime, though there’s no definition of suspected insurance fraud. Each insurer could have its own definition, which determines which and how many cases it sends to the fraud bureau.

Most insurers don’t report all suspected frauds. We understand that. Besides, fraud bureaus don’t have the staff to handle every case. But for an insurer to say it has no suspected frauds to report does a disservice to the larger fraud-fighting community and our common cause.

Fraud bureau directors and SIU leaders need to come together, develop a greater understanding and find more common ground so they can work jointly to combat fraud in the most efficient and effective ways possible.

We urge both sides to reach out to the other to make that happen.