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Global Fraud Trends: Device Insights Highlight Increased Threats Since Onset of Pandemic

TransUnion
Blog Post03/23/2021
Business Fraud and Identity Management
Global Fraud Trends: Device Insights Highlight Increased Threats Since Onset of Pandemic image

TransUnion’s latest quarterly analysis of global online fraud trends found since the COVID-19 pandemic began, fraudster threats against businesses have increased by 46%. In addition, our latest Global Consumer Pulse Study found more than one in three global consumers have recently been targeted by digital fraud.

“Fraudsters are always looking to take advantage of significant world events. The COVID-19 pandemic and its corresponding rapid digital acceleration brought about by stay-at-home orders is a global event unrivaled in the online age,” explains Shai Cohen, Senior Vice President of Global Fraud Solutions at TransUnion. “By analyzing billions of transactions, we screened for fraud indicators over the past year, and it’s become clear the war against the virus has also brought about a war against digital fraud.”

In the US, certain industries like financial services, gambling and telecommunications have become increasingly attractive to fraudsters as digital services are used more. On the other hand, community platforms like dating sites have become less appealing to online criminals as consumers change behavior according to lockdown precautions and reduced opportunities for social interaction.

Data intelligence points to an uplift in suspected digital fraud against businesses

TransUnion’s global fraud insights are based on intelligence from billions of transactions — and more than 40,000 websites and apps — detected using TransUnion TruValidate™, our identity proofing, risk-based authentication and fraud analytics solution suite.

We found suspected fraudulent digital transaction attempts1 against businesses worldwide increased 46% when comparing the periods of March 11, 2019–March 10, 2020 and March 11, 2020 (when the World Health Organization declared COVID-19 a global pandemic) to March 10, 2021. In the US, this percentage increased 22% in the same period.

Globally across industries, TransUnion found the countries with the highest rate of suspected fraudulent transactions during the pandemic (from March 11, 2020 to March 10, 2021) were: (1) the Seychelles, (2) Kazakhstan, and (3) Turkmenistan.

In the US overall during that same time period, TransUnion found the cities with the highest percent of suspected fraudulent transactions were: (1) Tempe, AZ, (2) Hamtramck, MI, and (3) Colonial Park, PA.

Fraud types and their impact on industries

As part of our trends analysis, we investigated which industries were most and least exposed to digital fraud — ranking top fraud types and the countries in which fraud originates.

We recorded the percent of suspected digital fraud attempts and compared the periods of March 11, 2019–March 10, 2020 and March 11, 2020–March 10, 2021.

Suspected Digital Fraud Attempt Rate Post-Pandemic Declaration
Industry Suspected fraud change Top type of fraud Top country for suspected fraud origination
Telecommunications

57.52%

Credit card fraud

Syria

Financial Services

57.49%

Identity theft

Seychelles

Gambling

54.81%

Policy/License agreement violations

Sri Lanka

Gaming

48.40%

Gold farming

Seychelles

Retail

38.71%

Promotion abuse

Seychelles

Insurance

32.52%

Ghost broking

Pakistan

Travel & Leisure

29.68%

Credit card fraud

Venezuela

Logistics

4.87%

Shipping fraud

Egypt

Communities (online dating, forums, etc.)

-11.10%

Profile misrepresentation

Cote D'ivoire

Perhaps reflecting consumers increased need for escapism and fun during the pandemic, our research found in the US, the top impacted industries were: (1) Gambling, (2) telecommunications, and (3) travel and leisure.

Two men holding phones

A deeper dive into iGaming fraud

One of the fastest growing industries (both pre and during the COVID-19 pandemic) has been iGaming. We reported a +19% growth in transactions among global iGaming customers from 2019 to 2020, and recently published our iGaming report with our latest fraud research.

Key takeaways include:

  • Players are at risk ― Online gambling customers experienced a +9% uplift in the rate of suspected fraud among the hundreds of millions of iGaming transactions TransUnion analyzed for risk indicators in 2020
  • Customers still demand a smooth mobile-first experience ― Whilst we uncovered a decrease in the iGaming mobile transaction rate for the first time since at least 2016, mobile devices still account for 69% of all online gambling transactions
  • Top fraud types ― Fraud rings and money laundering operations remain a constant and damaging commercial threat to the iGaming industry
Melissa Gaddis, Senior Director of Customer Success, Global Fraud Solutions at TransUnion, elaborates on the shift around device preference and what this could mean going forward: “We believe mobile online gambling transactions dipped because so many people used their desktops while working from home due to the pandemic. However, we expect the long-term impact of mobile to continue to be paramount for business success. Mobile devices will be key to providing a seamless way for online gamblers to transact and businesses to assess risk with biometric-driven multifactor authentication.”

Consumers targeted by digital fraud related to COVID-19

TransUnion’s Global Consumer Pulse Study also found as of March 16, the 36% of consumers who said they were targeted by digital fraud related to COVID-19 in the last three months is higher than approximately one year ago. In April 2020, 29% said they had been targeted by digital fraud related to COVID-19. In the US, this percentage increased from 26% to 38% in the same timeframe.

Gen Z (those born 1995 to 2002) is currently the most targeted out of any generation at 42%; followed by Millennials (37%). Similarities were observed in the US where Gen Z was most targeted at 53%, with Millennials following at 40%.

“TransUnion documented a 21% increase in reported phishing attacks among consumers who were globally targeted with COVID-19-related digital fraud from November 2020 to recently,” comments Gaddis. “This revelation shows just how essential acquiring personal credentials are for carrying out any type of digital fraud. Consumers must be vigilant, and businesses should assume all consumer information is available on the dark web and have alternatives to traditional password verification in place.”

How our TruValidate suite helps businesses detect and prevent fraud

TransUnion Global Fraud Solutions unite consumer and device identities to detect threats across markets while ensuring friction-right user experiences. The solutions, all part of the TransUnion TruValidate™ suite, fuse traditional data science with machine learning to provide businesses unique insights about consumer transactions, safeguarding tens of millions of transactions each day.

1 The percent or rate of suspected fraudulent digital transaction attempts are those that TransUnion’s customers either denied or reviewed due to fraudulent indicators compared to all transactions it assessed for fraud

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